Tax legislation and relocation expenses – clubs, agents and players beware

When moving to a new club footballers are regularly offered reimbursement of certain relocation expenses. However, failure to comply with the relevant legislation can leave the club and/or player exposed to unexpected liabilities.

When football players move from one club to another it will often involve a relocation from one part of the country to another, or may involve a relocation from abroad. Whilst the transfer may be a stressful time for a player, in terms of his or her career, the difficulties faced by a player and their family of relocating their home can be an equally stressful experience.

The tax legislation in England recognises that a relocation, as a result of employment, can be a stressful and costly experience and it affords employees Income Tax and National Insurance relief on payments made by employers in relation to the relocation. Chapter 7 of Part 4 of the Income Tax (Earnings and Pensions) Act 2003 provides an exemption that removes liability for income tax on certain 'costs' of the employee's relocation up to a limit of £8,000. Employers will regularly offer to provide the employee, subject to the relocation, an allowance of up to £8,000 towards the cost of that relocation.

However, and for the avoidance of doubt, this is not an additional £8,000 which an employer can pay to an employee for him or her to use as they wish. There are conditions that must be met to qualify for the exemption.

In the football world there is a common misconception amongst players, agents and clubs that the £8,000 relocation expense allowance, which is often discussed during the negotiation of a transfer, is available to the player to claim as they see fit. It is only when a player attempts to activate the clause in their contract, often under a misconceived intention to claim payment from the club of £8,000, that the true mechanics of the "Relocation expenses clause" become clear.     

What are valid relocation expenses?

The important point to note is that relocation expenses relate to the 'cost' of the relocation. Typical valid relocation expenses are: 

  • The cost of buying or selling a home (i.e. legal fees and survey fees)
  • The cost of moving (transport costs and related insurance)
  • The cost of necessary furniture / domestic goods to replace those unsuitable for the new residence
  • Bridging loans

A general overview of the conditions which must be met to claim back the costs of relocation, up to a limit of £8,000, are set out below.

  • The employee must change their main residence as a result of their employment.
  • The new residence must be within reasonable daily travelling distance of the new place of work. The old residence must not be within reasonable travelling distance.
  • The costs of the relocation must not exceed £8,000 (or whatever limit is specified in the tax legislation in force from time to time).
  • The costs are incurred before the 'limitation day' – which is the last day of the tax year after which the employee begins to perform their duties in the new role. 

In football, as part of a transfer, the buying club may offer to support the incoming player's relocation by offering to reimburse the player's relocation expenses up to a limit of £8,000. However, the club is likely to caveat that offer of payment by specifying in the contract that the player must first incur the expenses, submit the relevant receipts / invoices and that the expenses incurred must be valid 'relocation expenses' in accordance with the relevant tax legislation in force at the time.

Players and agents may not appreciate the narrow wording of the clause and strict criteria that applies to the player being able to successfully recover the expenses incurred. Players and agents will often see the offer from the buying club as a gesture of goodwill and a further payment and / or incentive as part of the deal.


Should a club pay the £8,000 without any evidenced connection to relocation expenses it will be subject to interest and penalties in relation to failure to operate PAYE correctly.


  • Clubs should ensure they have taken legal advice on the strict wording of the relocation expense clause included in any player contract.
  • Players and agents should ensure that they understand the strict wording of any relocation expense clause and the mechanics of how it works.
  • If players are expecting a specific payment from a club then both player and agent should seek legal advice on the tax implications of that payment.

If you have any questions or would like more information about Tax legislation and relocation expenses related to the sports sector, please contact a member of our dedicated and experienced Sports Group using the details below.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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James Cashman

Senior Associate

I am an experienced corporate tax solicitor and chartered tax adviser. I specialise in share options, employee incentives and all tax aspects of private equity and M&A transactions.