EIM03138 - removal or transfer costs: expenses and benefits reporting requirements: forms P11D and P9D
The exemption for removal expenses and benefits to which Section 271 ITEPA 2003 applies is limited to 拢8,000 per employee per relocation. If the total of these expenses and benefits exceeds 拢8,000 the excess is taxable.
The PAYE regulations state that PAYE should not be deducted from qualifying expenses that together with benefits exceed the limit of 拢8,000. The regulations say the excess should instead be reported on form P11D or form P9D (for 2015/16 and earlier).
Payments to an employee that are not qualifying expenses, for example a compensation payment for loss on sale (see EIM03126) should follow the normal PAYE rules.