If you are considering relocating your business, or opening a new branch and wanting to relocate some staff you currently employ, you may want to consider a relocation assistance scheme. Here are some things you should consider beforehand to ensure the scheme works for you and achieves what you need it to.

What’s the business case?

Relocation packages can be expensive so you need a decent business case to ensure a scheme is worthwhile implementing. Things that might constitute good business grounds for offering relocation packages include recruiting/retaining valuable employees, transferring specific knowledge or skills to a different location, and avoiding redundancy and re-recruitment costs.

Who will be eligible?

Be careful when relocating your business. Although a relocation package offer can represent good value, offering it as a blanket entitlement to all employees is rarely cost effective. Instead consider eligibility criteria, which will help you control costs and ensure you’re getting value for your investment.

There may be some employees you are less concerned about losing, either because you are confident they’ll relocate anyway or they are not particularly valuable, or their skills are easily found at the new location. As long as you are careful about potential discrimination, it’s fine to limit relocation package offers to specific roles or to business areas which may be of particular concern.

What expenses to cover

Relocation packages should ensure that employees are not out-of-pocket because of the move, but to represent value for money you need to ensure employees don’t profit out of the scheme, or are not able to claim for expenses which aren’t actually over-and-above what they’d expect to incur normally.

For example you may wish to not reimburse costs of purchasing a new home where the employee previously rented accommodation, or may want to state that you will pay for removals but not solicitors fees, and will or will not pay for new domestic appliances or other household expenses.

Examples of items which you could include are: professional fees such as solicitors, estate agents and surveyors, stamp duty, removal and storage costs, travel expenses and replacement items for the new house.

Make sure all expenses are claimed with supporting invoices or receipts, and be clear about any limits, and what is-or-isn’t included in the list of expenses you will cover.

What limit to set

As well as listing what type of expenses you will and will not cover, it’s also sensible to be clear upfront about any upper limits in the relocation package. You may either want to set limits on the amount you are prepared to reimburse for different expenses such as estate agent fees, removal costs or other items, or to set a ‘ceiling’ and allow employees to decide within that allowance what they will spend it on (obviously within guidance about acceptable expenses).

You may also want to be clear at the beginning that new accommodation must be of an equivalent standard to the employee’s existing home, and may want to consider varying assistance levels if this changes.

Be aware of tax rules

There is relief on tax and national insurance for some relocation expenses, provided the relocation is necessary. There is a cap of £8,000 of reimbursed costs, and the relief applies to most costs involved in a move, including buying and selling property, removals, travel and subsistence and new appliances or items for a new home.

The employee doesn’t have to dispose of their old property to qualify for tax relief, so for example if they choose to rent out their owned property and rent new accommodation, they could still qualify, as long the new property becomes their main residence and their previous home is not within reasonable travelling distance of the new workplace.

Whether to require repayment

If you pay out on expenses before a move that then does not take place, or on expenses incurred in a move for an employee who leaves employment shortly afterwards, you may wish to reclaim all or some of the amount paid.

Terms and conditions for this need to be made clear at the outset, so consider whether you will operate a sliding scale, or whether the ‘type’ of termination will make a difference, i.e. if the employment ends through redundancy or ill health you may waive the repayment. Then set out the terms in an agreement for the employee to sign before incurring expenses so there is no doubt about the conditions of your package.

 

If you’re considering a relocation assistance scheme and would like more advice, do get in touch.