Income Tax (Earnings and Pensions) Act 2003 section 35-36

Removal benefits and expenses [ITEPA 2003 Sch 7 paras 35-36]

Sections 35–36 deal with transitional rules for the tax exemption limit on removal benefits and expenses when a change of residence straddles the 6 April 2003 commencement date, and with preserving existing HMRC directions about timing.

• Where removal benefits were partly provided or expenses partly incurred before 6 April 2003 and partly on or after that date, the exemption limit under Section 287 is modified so that the value already received before 6 April 2003 (as previously defined under the old ICTA rules) is taken into account when calculating the remaining available exemption.
• This ensures continuity so that employees cannot effectively claim a fresh exemption allowance under the new legislation for a relocation that was already partly exempted under the old rules.
• Any direction previously given by HMRC under the old ICTA Schedule 11A rules designating a specific day on or after 6 April 2003 as "the relevant day" for a change of residence is not invalidated by the repeals made by this Act.
• Instead, such a direction continues in force as if it were a direction under Section 274(2) of the new Act, treating that designated day as "the limitation day" for the purposes of the new removal expenses exemption provisions.