Income Tax (Earnings and Pensions) Act 2003 section 326

Expenses incidental to transfer of a kind not normally met by transferor

Section 326 provides an income tax exemption for certain expenses paid or reimbursed in connection with an asset transferred by an employee to their employer by reason of the employment, where those expenses are not of a kind normally borne by the person transferring the asset.

• No income tax arises on expenses paid or reimbursed that are incidental to an employment-related asset transfer, provided they are incurred wholly and exclusively as a result of the transfer and are not of a kind normally met by the transferor
• An employment-related asset transfer occurs when an employee transfers an asset (or beneficial interest) to their employer or a nominee, and the right or opportunity to make that transfer arose by reason of the employment
• The exemption most commonly applies where an employee on a relocation package transfers their home to the employer, and the employer pays acquisition costs it would not normally fall to the employee to bear
• Costs that the transferor would normally meet — such as the vendor's own disposal costs on a house sale — fall outside the exemption and remain taxable