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Income Tax (Earnings and Pensions) Act 2003

Section 326: Expenses incidental to transfer of a kind not normally met by transferor

1373.This section exempts from income tax certain paid or reimbursed expenses which arise in connection with an asset transferred by reason of the employment. This exemption will most commonly apply where an employee, benefiting from a relocation package, transfers his or her house to an employer who pays the acquisition costs.

1374.It derives from ESC A85. See Change 80 in Annex 1.

1375.Subsection (1) provides that no liability to tax arises where expenses incidental to an “employment-related asset transfer” (defined at subsection (2)) are paid or reimbursed. The expenses must be wholly and exclusively incurred as a result of that transfer and not of a type normally met by the transferor. Thus the disposal costs of a house sold to an employer under a relocation package are not within the exemption as the vendor would normally be the one to meet these costs.

1376.Subsection (2) defines “employment-related asset transfer” as the transfer of an asset to an employer or person nominated by the employer and which arose by reason of the employment.

1377.Subsection (3) explains what is meant by “transfer”.

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