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Tax Reform & Brexit

Responding Policy Changes

RELOCATION POLICY CHANGES MADE DUE TO TAX REFORM

Most firms, across sizes, implemented policy changes last year in response to the tax law and its elimination of the deduction for moving expenses. A majority plan to do so again in 2019. While the most common change was to gross-up taxable relocation benefits, firms put many other methods in play to manage costs and protect employees against negative financial impacts.

More than a year after tax reform was enacted, the relocation industry is still dealing with its impact. It promises continued administrative and financial challenges in 2019 and beyond. Regardless, relocation professionals view the future with optimism. The need to get talent to the right places at the right times remains of paramount importance, and they show stalwart commitment to adapt policies and procedures.

IN 2018

 
  • 4 out of 10 firms across sizes restructured policy/policy tiers and streamlined processes to reduce costs.
  • Almost 1/2 of small and mid-size firms withheld on taxable relocation benefits versus 34% of larger firms.
  • Mid-size firms were the most likely to expand lump sum usage. Large firms were the least likely.

IN 2019

 
  • Around half across sizes plan to restructure policy/policy tiers, withhold on taxable relocation benefits, and streamline relocation processes to reduce costs.
  • Fewer mid-size firms plan to gross-up on taxable relocation benefits. More than half of small and large firms plan to do so. Most mid-size firms enacted this policy change in 2018.
  • More than half of small and large firms plan to expand lump sum usage. Fewer mid-size firms (37%) plan to do so. Most mid-size firms enacted this policy change in 2018.

Looming Uncertainty of Brexit's Impact. The wildcard in the mix of relocation this year is the exit of Great Britain from the European Union. As back-and-forth political negotiations persist, there is a sense of unknowability about the ultimate fallouts.

One in three participating organizations are vastly uncertain of Brexit’s impact on relocation this year; roughly one fourth of firms that relocate employees internationally are unsure. The consensus is that relocation volumes will remain either unaffected or will increase, rather than decrease, while administration complexity, recruiting difficulty, and costs will see increases or stay the same. Several firms anticipate policy changes, while many others feel policies will stay roughly the same. Very few think policy tweaking in response to Brexit will decrease.

The anticipated impact of Brexit among firms that relocate internationally varies across company size:

45% of mid-size firms are concerned Brexit will increase the complexity of administration, compared to a third (35%) of small or large firms.

Nearly 1 in 3 firms across size feel Brexit will make recruitment more difficult.

Mid-size and small firms are most likely to

  • Believe policy changes will increase (38% & 40%), compared to roughly one fifth (22%) of large firms.
  • Anticipate increasing relocation costs (45% & 38%), compared to one fourth of large firms.
  • Feel relocation volumes will increase (44% & 33%), compared to essentially one fifth (19%) of large firms.
Question 17-1
Projected Impact of Great Britain's exit (Brexit) from the European Union
Chart Q17
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Question 17-2
Projected Impact of Great Britain's exit (Brexit) from the European Union
Chart Q17-2
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Question 17-3
Projected Impact of Great Britain's exit (Brexit) from the European Union
Chart Q17-3
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Question 17-4
Projected Impact of Great Britain's exit (Brexit) from the European Union
Chart Q17-4
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Question 17-5
Projected Impact of Great Britain's exit (Brexit) from the European Union
Chart Q17-5
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Question 18-a
Companies who made changes to relocation policy in 2018 in response to the U.S. tax cuts and jobs act*
Chart Q18-a
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Question 18-b1
Changes to relocation policy made in 2018 in response to tax reform
Chart Q18-b1
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Question 18-b2
Changes to relocation policy made in 2018 in response to tax reform
Chart Q18-b2
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Question 19-a
Companies who anticipate changes to relocation policy in response to the U.S. tax cuts and jobs act
Chart Q19-a
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Question 19-b1
Changes to relocation policy anticipated in 2019 in response to tax reform
Chart Q19-b1
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Question 19-b2
Changes to relocation policy anticipated in 2019 in response to tax reform
Chart Q19-b2
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