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Tax-free relocation allowance for Associate Dentists
Suppose you’re moving house to take up a new associate position or to start your squat dental practice. In that case, you may be able to claim up to £8,000 of tax-free relocation expenses — but only if you’re working through your own limited company.
This guide explains who qualifies, outlines the rules, and provides instructions on how to claim it.
What is the relocation allowance?
The relocation allowance allows your limited company to reimburse you up to £8,000 of qualifying moving costs — free of tax and National Insurance. This scheme is designed for employees and directors who need to relocate to take up a new job or move for an existing one.
What’s the tax saving worth?
If you’re an associate dentist working through your own limited company, the relocation allowance offers a significant tax advantage.
Instead of taking £8,000 as a taxable dividend — when you’re a higher-rate taxpayer — your company can cover £8,000 of your moving costs tax-free. You keep the full amount, and the company also gets Corporation Tax relief on the expense.
📊 That’s a total combined tax saving of around £4,700 — made up of approximately £2,700 in personal tax and £2,000 in Corporation Tax.
When does it apply?
✅ Qualifying Work-Related Reasons:
- 💼 You’ve accepted a more suitable or better-paying associate dentist role.
- 🧠 The new practice offers improved work–life balance or better mental health support.
- 🦷 You’re moving to a practice with modern equipment, digital workflows, or stronger clinical support.
- 👥 You’re joining a practice that offers mentoring, CPD, and career progression.
- 🏢 You’re starting or buying a new dental practice.
- 📈 Your existing practice is expanding.
- 📍 You’re relocating to an area with higher demand for your skills.
❌ Non-Qualifying Personal Reasons:
- ❤️ Moving to be closer to a partner or family
- 🏫 Moving to be nearer a child’s school
These do not qualify unless the move is required for your new job role.
Who qualifies?
To qualify, you must meet all three HMRC conditions:
- The move must be closely connected to starting a new job or role
- The new home must be within reasonable daily travel of the new workplace
- The old home must not have been within reasonable daily travel of the new workplace
What expenses are covered?
Your company can reimburse a wide range of qualifying costs, including:
🧾 Buying a new home:
- solicitor’s fees
- Stamp Duty (or LBTT/LTT in Scotland or Wales)
- mortgage arrangement and survey fees
🏠 Selling your old home:
- estate agent and solicitor’s fees
- loan redemption charges
- security or insurance for a vacant property
- disconnecting utilities (gas, electricity, phone)
🚛 Moving and travel:
- removal company and van hire
- temporary accommodation and storage of furniture
- travel and subsistence costs during the move
- house-hunting visits
- essential domestic items (e.g. fridge, washing machine)
- bridging loan interest (within the £8,000 limit)
- costs from failed purchases (e.g. survey fees)
A note on Stamp Duty
Stamp Duty (or LBTT/LTT in Scotland or Wales) is often the single largest qualifying expense when buying a new home — and in many cases, it will exceed the £8,000 tax-free limit on its own.
Rather than tracking and documenting lots of smaller costs, it can be simpler and more efficient to reimburse yourself the full £8,000 and retain clear evidence of the Stamp Duty paid. This approach is generally accepted by HMRC, as long as the Stamp Duty was a genuine cost linked to your qualifying move.
It’s a straightforward way to maximise the allowance while reducing admin time and paperwork.
🦷 Example: Sophie the Associate Dentist
Sophie is an associate dentist moving from Manchester to Exeter to join a new dental practice. She operates through her own limited company, of which she is the sole director.
To take up the new position, she relocates over 200 miles, as daily commuting would be unreasonable. The new practice offers more advanced technology, better mentoring, and a more suitable patient base, resulting in a substantial improvement in her working conditions.
Her move satisfies all of HMRC’s qualifying conditions for tax-free relocation expenses:
✅ The move is closely linked to starting a new position
✅ It takes place within 12 months of starting work
✅ Her new home is significantly closer to the workplace than her old one
✅ The old home is no longer reasonably commutable
✅ She incurred actual costs associated with the move
Sophie pays £12,000 in Stamp Duty on her new home. Her company reimburses her £8,000. Because the claim is within HMRC’s £8,000 limit and meets all the criteria, the entire reimbursement is tax-free.
That means:
- Her company also saves around £2,000 in Corporation Tax (because the £8,000 is a deductible expense)allowance.
- No Income Tax or National Insurance for Sophie
- No employer National Insurance for Sophie’s company to pay
Do I need to document it?
Yes — your company should keep clear records of the reimbursement:
- hold a board meeting to approve the payment
- record a formal board minute
- keep all invoices and receipts in the company records
Example 📋 Sophie’s Board Meeting Minutes
Before committing to the move, Sophie holds a formal board meeting (as the sole director of her limited company) to document the decision.
The minutes record:
- The business case for the relocation — joining a more modern practice in Exeter with better facilities and earning potential
- Why the move benefits the company: improved turnover, professional development, and more clinical support
- The decision to reimburse up to £8,000 of qualifying relocation costs, including Stamp Duty, per HMRC guidance
- A resolution that the costs meet the “necessary for employment” criteria and will be treated as a tax-free relocation allowance under EIM03101
The meeting note is signed, dated, and filed with the company’s records to support the tax position should HMRC ever ask for evidence. The board minutes:
“It was resolved that the company will reimburse Dr. Sophie Dentist up to £8,000 for qualifying relocation expenses incurred in connection with her appointment as Director and her relocation to Exeter in May 2025.”
FAQs
🦷 Can self-employed sole traders or partnership associate dentists claim this?
No — it only applies to directors of a limited company or employees
🏡 Can I rent instead of buying?
Yes — removal costs, temporary accommodation, and selling your previous home can still qualify. You won’t be able to claim buying costs, such as Stamp Duty.
📜 What counts as buying a new residence?
You (or a family member) must legally acquire a home (freehold or leasehold).
🏨 Can my company pay for temporary accommodation?
Yes — especially if there’s a gap between leaving your old home and moving into the new one.
📦 Are storage costs allowed?
Yes — for temporary storage of household items.
💸 What if my costs go over £8,000?
In most cases, it’s not tax-efficient to exceed the limit. It’s usually better to keep claims within the £8,000 cap to avoid unnecessary tax consequences and extra administration.
👩❤️👨 Can my spouse or partner — if they’re on the company payroll or listed as a director or company secretary — also claim?
If your spouse or partner performs their duties from home both before and after the move, they generally won’t qualify for the relocation allowance, even if the home address changes. This applies whether they’re an employee, an unpaid or paid director, or a company secretary.
However, if they also relocate to work at a new business location (not from home) and meet HMRC’s qualifying conditions, then yes — each of you can claim up to £8,000 in tax-free relocation costs, provided the expenses are incurred personally.
⏳ Can I claim before I start my new role?
Yes — the allowance can be claimed before you physically start work, as long as the move is closely connected to taking up a new role. This includes situations where you’re setting up a new company or joining a new practice, and the intention to begin working is clear and genuine.
🚫 Can the allowance be paid before expenses are incurred?
No — the relocation allowance cannot be paid in advance. It must be paid either as reimbursement after the expenses have been incurred or in lieu (e.g., directly to a supplier or landlord) once the expense arises. Advance payments are not allowed under HMRC rules and could lead to the allowance being treated as taxable.
📝 Will the £8,000 allowance increase next tax year?
No — the £8,000 tax exemption limit for relocation allowances has remained frozen since it was introduced in 1993. As of now, there are no publicly announced plans to increase the allowance. The government periodically reviews tax policies, so any future changes would likely be announced in upcoming budgets or policy updates.
Further Reading
- HMRC Employment Income Manual: EIM03101
- GOV.UK – Expenses and Benefits: Gov.uk Relocation Expenses Guidance
- Tax Legislation: ITEPA 2003, Sections 271–289
Need help with relocation expenses?
At SmallBiz Accounts, we help associate dentists move house — tax-efficiently.
📋 Want to make sure your move qualifies?
Get our free Relocation Allowance Checklist — it explains exactly what you can claim, what receipts to keep, and how to avoid the common mistakes that trip up associate dentists.
👉 Click here to request the checklist
🦷 Are you an Associate Dentist thinking about relocating or changing accountants? Schedule a discovery meeting or call — we’ll help you understand what’s claimable and what’s not.
