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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.

Service provided Amount
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) × £6,000 = £1,200.

The amount chargeable to tax will be:

Cost of services provided   £7,500
     
Management fees   £1,500
    £9,000
Less exempt expenses and benefits £6,000  
and exempt management fees £1,200 £7,200
Taxable expenses and benefits   £1,800