The following Employment Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
The payment of an employee’s council tax or utility or other bills is usually linked to the provision of living accommodation to the employee.
Whether or not the payment of council tax or utility bills is treated as a taxable benefit depends on whether the reason for the provision makes it an exempt benefit under specific legislation.
Payments in respect of gas and electricity made by an employer in relation to employer-provided accommodation are always taxable. However, how and why the benefit is provided to the employee determines both the value of the benefit and reporting requirements.
Whether or not the payment of council tax or utility bills on behalf of the employee constitutes a taxable benefit depends on why the amounts have been paid.
If the payment of council tax does not fall into one of the exemptions below then the full amount is taxable. The section on ‘reporting requirements’ below sets out how it should be reported and taxed.
They payment of council tax or utility bills (specifically council tax, water charges or sewerage charges) is not taxable if it is provided in connection with living accommodation which is exempt from tax either as job-related accommodation or due to a security threat; this is confirmed by HMRC guidance at EIM11332. Broadly, there are two exemptions:
job-related accommodation ― where either the accommodation is necessary for the proper performance of the duties, or it is both customary to provide the accommodation and it is provided for the better performance of duties
accommodation provided due to a security threat
ITEPA 2003, s 314
The specifics of these exemption exemptions applying to the provision of living accommodation are discussed in the Living accommodatio
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