A relocation expenses list is an important document to consider when relocating employees. It’s necessary, not only because it provides useful information about what to expect, but also because it can help you avoid legal trouble as an employer. It helps you keep things on the up and up while your employee gets settled in at their new home.
Here’s everything you need to know about preparing an employee relocation expenses list and what should be included.
What is a Relocation Package?
You may have seen a relocation expense list referred to as, or alongside, a relocation package. A relocation package is offered to employees by a company when they intend to have them relocated for their jobs. For employees, a relocation package should ease the transition into their new life and location. A well-designed package can give peace of mind and increase the chances of an employee accepting the offer.
7 Considerations When Creating a Relocation Expenses List
When creating a relocation expenses list, there are several factors that you should keep in mind. For instance, your employees’ current residence and assignment destination will affect how much you’ll need to budget for relocation expenses. Moving costs, which contribute towards a large percentage of relocation expenses, will also depend on whether you’re hiring movers for your employees, among other things.
Below are some of the top considerations when creating a relocation expenses list.
- Sale or Move Assistance – expenses would involve costs incurred by employees when moving out of rental accommodation such as exit fees and legal fees regarding selling.
- House Hunting Costs – fees associated with house-hunting in a different area should be considered but this can get difficult if moving internationally, so consider what to cover.
- Temporary Housing – in some cases, especially internationally, it can be easier to place employees in temporary housing while they look for something more permanent.
- Removal and Transportation – consider allowing for expenses on transporting goods to the new location and any associated shipping costs.
- Cultural and Language Training – depending on where your employee is moving to, cultural or language courses may be required to assist with their ease of settlement in their new home.
- Airfares – it can be difficult to budget for airfares as the costs can fluctuate vastly depending on the time of year, and whether you are also paying for family members and dependants to get to the assignment destination.
- Additional Costs – there may also be additional miscellaneous costs the employee feels they shouldn’t have to pay, such as professional cleaning of their new home.
The purpose of creating an employee relocation expenses list is to help you estimate how much money you’ll need to pay for certain expenses during your employee’s move – for example, there will be different costs associated with driving across the country versus flying into town and renting a car upon arrival. Our recent blog has some excellent tips for saving on employee relocations.
Are Relocation Expenses Exempt from Tax?
Some relocation costs are exempt from tax up to a budget of £8,000. These expenses are known as qualifying costs and they include several aspects of the removal process. If you are wondering which expenses are exempt from tax then we have included a list of the tax exemptions below:
- Costs of selling and buying their property
- Any costs related to the actual move
- Transport and removal–related costs
- Expenditure related to fixings and fittings in the new home
- Bridging loans in the event the sale of their property is incomplete
Issues Arising from Employee Relocation
It is important to set out the expenses covered for relocating before your employee agrees to relocate to ensure that everything is clear and upfront. Issues can arise mid-move if the employee feels there is something that should be covered by the relocation package that wasn’t specified. Whether or not you can insist on an employee relocating will depend on the terms of their contract and the mobility clause. Employers should think carefully before insisting that an employee needs to move. It is always best to take on board the employee’s needs and requirements before encouraging them to move as they could be difficult in their demands.
The above is our guide to some of the top aspects of expenses for employee relocation. But if you are looking for further support, then get in touch with Gerson Relocation. Our services provide support to make sure that you have provided your employees with everything they need to move abroad.
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