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HMRC internal manual

Employment Income Manual

Removal or transfer costs: relocation companies: management fees: example

Part 4 Chapter 7 ITEPA 2003

A relocation package provides an all-inclusive service with a fixed management fee of £1,500.

Services provided:      
  legal fees £1,500  
  estate agent’s fees £1,500  
  removal costs £500  
  loan interest £2,500  
  counselling £1,500  
  Total £7,500  

Only £6,000 is exempt as the costs of counselling do not qualify for exemption.

The proportion of the management fee that qualifies for exemption is:

(£1,500 / £7,500) x £6,000   = £1,200

The amount chargeable to tax will be:

Cost of services provided   £7,500
Management fees   £1,500
Less exempt expenses and benefits £6,000  
and exempt management fees £1,200 £7,200
Taxable expenses and benefits   £1,800