Demeter has recently taken up a new employment and is seeking advice on the tax treatment of certain components of his remuneration package.

Demeter:
– Is UK resident and domiciled.

– Commenced employment with Poseidon Ltd on 1 December 2018.

– Will have no source of income, other than from Poseidon Ltd, in all relevant future tax years.

– Will be a higher rate taxpayer in all relevant future tax years.

– Has relocated to London, from Manchester, a city more than 150 miles north of London, to take up this employment.

Remuneration package from Poseidon Ltd:
– Demeter will receive an annual salary of £130,000.

– On 1 December 2018, Poseidon Ltd made a one-off lump sum payment of £20,000 to Demeter as an inducement to take up employment with the company.

– Poseidon Ltd paid Demeter £5,000 towards his costs of relocating to London. The company is also paying him £1,500 each month for four months from 1 December 2018 towards renting accommodation in London until he purchases a new house on 1 April 2019.

Relocation to London:
– Demeter incurred costs in relation to his relocation to London of £6,000. This amount includes estate agent fees of £2,800 in connection with the sale of his house in Manchester on 31 October 2018.

– Demeter signed a four-month lease for a flat in London from 1 December 2018 at a monthly rental of £1,700.

Required:
(a) Explain the extent to which the receipt of the £20,000 lump sum inducement payment, and the relocation package in relation to Demeter’s move to London, will give rise to taxable employment income for him.  (5 marks)