Living accommodation

By Tolley in association with Philip Rutherford
Living accommodation

The following Employment Tax guidance note by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:

  • Living accommodation
  • Introduction
  • Living accommodation
  • Calculating the benefit
  • Cost of the property
  • Cost of providing the property is £75,000 or less
  • Cost of providing the property is more than £75,000
  • Apportioning the benefit
  • Accommodation and interaction with salary
  • Preventing a double tax charge
  • Statutory exemptions from the benefit charge
  • Non-statutory exemption from the benefit charge
  • Anti-avoidance rules
  • Reporting requirements
  • Salary sacrifice
  • Future changes to the taxation of living accommodation


Employers may provide living accommodation to their employees by way of their employment. There is specific tax legislation that covers the provision of accommodation and the expenses associated with it.

In certain circumstances a statutory exemption from tax is available for particular employments.

Living accommodation

A tax liability on the provision of accommodation to an employee is imposed by ITEPA 2003, s 102. The section states that if accommodation is provided by way of his employment, for all or part of a tax year, then the cash equivalent of the benefit should be treated as earnings. The calculation of the cash equivalent is discussed below.

A liability can also arise under ITEPA 2003, s 62 as earnings where employers settle employee’s rents or provide special entitlements in relation to rent. This too is discussed below.

The term ‘provided’ should be given its everyday meaning; there are no specific legal definitions of it in relation to living accommodation.

EIM11405, EIM11406

The accommodation does not necessarily have to be provided by the employer. As long as the accommodation is provided by reason of the employee’s employment, even if it is provided by a third party, then a charge to tax will arise.


Living accommodation is also not defined, but it applies to houses, flats, houseboats, holiday villas and apartments. It should not be read to include non-living accommodation such as an office or garage.


Living accommodation should be differentiated from the provision of board and lodging, which is covered in the Lodging guidance note. Lodging is significantly more limited in its scope and refers to the provision of little more than somewhere to eat and sleep.

The charge to tax applies whether the accommodation

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