Accommodation provided by the employer

By Tolley
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The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Accommodation provided by the employer
  • Exempt accommodation
  • Cash equivalent ― rented accommodation
  • Cash equivalent ― employer-owned accommodation
  • Preventing a double tax charge
  • Future changes to the taxation of living accommodation
  • Living expenses in relation to exempt accommodation

If a house, flat or any property that is owned or rented by the employer is made available for use by an employee or director, a taxable benefit will arise, with the cash equivalent dependent on whether it is rented or owned by the employer. To be taxable, the accommodation must have been provided ‘by reason of employment’ (but see the exemptions below). Provision of accommodation to a member of the employee or director’s family is chargeable on the employee / director (unless the family member is also an employee, see EIM20505). See the Employment income guidance note.

ITEPA 2003, s 97

From 2016/17 onwards, the accommodation rules apply irrespective of whether or not the terms on which the property is made available constitute a fair bargain, ie the rent paid by the employee is the same as he would have paid to an independent third party (which may be less than the market value determined by HMRC). This has always been HMRC’s view but it has now been codified to put the tax treatment beyond doubt. This provision has also been inserted into benefit rules for company cars, company vans, and taxable cheap loans and has been driven by the decision in the Apollo Fuels company car case.

ITEPA 2003, s 97(1A); HMRC v Apollo Fuels [2016] STC 1594 (subscription sensitive)

The cash equivalent of the benefit is shown in section D of the form P11D . If the employee or director is required to submit a Tax Return, the figure from the P11D is copied into box 14 of the Employment supplementary page .

Class 1A national insurance contributions (NIC) are due on taxable accommodation benefit. Class 1A NIC is charged at a flat rate (13.8% for 2011/12 onwards) and is paid by the employer. The Class 1A NIC is calculated and reported on form P11D(b) , which must be submitted to

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