ACCA Advanced Taxation (ATX) Practice Exam

What is the amount of exempt relocation expenses as an employment benefit?

1. First £4,000

2. First £6,000

3. First £8,000

4. First £10,000

The correct answer is: First £8,000

The amount of exempt relocation expenses that can be treated as an employment benefit is set at the first £8,000. This amount is established by legislation governing the tax treatment of certain employee benefits, particularly in relation to relocation costs. When an employee relocates for work, certain costs associated with the move may qualify for exemption from income tax, which helps alleviate the financial burden on employees who must change their primary residence due to job requirements. The limit of £8,000 means that as long as an employer covers relocation expenses within this threshold, those costs will not be subject to tax as a benefit-in-kind to the employee. Understanding this limit is crucial for tax planning and compliance, as it ensures that both employers and employees are aware of the tax-free benefits related to relocation. Employers can also budget accordingly when planning employee relocations, knowing that expenses up to this amount will not incite additional tax liabilities.