EIM03129 - 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