TIME TO REVIEW RELOCATION ALLOWANCES
Under the extreme pressures facing the relocation sector and the industry it serves, this is the right time to review the relocation allowance.
Time to review out-of-date allowance threshold
For 26 years the tax threshold for relocations hasn’t changed. If it had kept up with the Retail Price Index, the allowance threshold would have more than doubled. In fact, accommodation prices have rocketed, meaning that, at £8,000, the allowance is now very out-of-date. This oversight can easily be put right. This will increase revenue from relocated people arriving in the UK. Everybody wins.
The relocation sector moves top talent into Britain. But relocation allowances haven’t been updated since 1994, and are a barrier to the financial return these individuals generate for UK business.
The Treasury can’t expect firms to attract talent for the 2020s with a tax arrangement that’s out of date by over a quarter of a century. There’s a real possibility these firms will do the calculation and take their people – and business - elsewhere.
The Relocation sector generates an additional £4bn of turnover per year in the UK economy every year - even if you just add up the salaries of those coming in. The allowances make firms choose the UK, and that’s a guarantee they’ll keep coming, making an extra £350 million for the UK economy – per month. Over time it adds a big, accumulative percentage to UK GDP.
For comparison, MP pay has risen by 344%. By contrast, the relocation allowance has suffered a real terms halving in value. We simply want to bring relocation allowances up to date with inflation. Let’s be consistent. It’s good for relocations and that’s good for Britain.
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