The Budget: Clampdown on relief for removal expenses: Relocation

CHANGES in tax allowances for people relocating for their jobs were criticised for inhibiting mobility and discouraging inward investment, writes Jason Nisse.

Most experts welcomed the Chancellor's decision to drop the rule, which has existed since 1988, that someone being moved by a company has to pay tax on any relocation costs paid by the employer unless they have already sold their old home.

However, they were angry at two other changes - that tax exemption on relocation costs will be restricted to pounds 8,000 and that tax will have to be paid on extra allowances for those moving to more expensive areas. The changes apply from 6 April.

The Confederation of British Industry said the average cost of relocation was pounds 25,000 and could be as high as pounds 55,000. Costs include removals, counselling and finding new schools.

Michael Kaltz, of the accountancy firm Ernst & Young, said the change would make people less willing to relocate.