Your taxable benefit questions answered with worked examples for 2018/19.
This article seeks to answer your taxable benefit questions – with worked examples for 2018/19 – on houses, flats, houseboats, holiday villas and apartments but also workshops, garages or offices - plus highlight an important living accommodation taxable benefit change that applies for 2019/20.
A charge to tax (ITEPA 2003 Part 3 Chapter 5) arises when an employee is provided with living accommodation by his employer (or by another person) where the provision is by reason of the employment and the accommodation is provided:
rent free, or
at a rent less than that paid by the person providing it, or
at a rent less than the amount chargeable under section 103 ITEPA 2003.
There is no statutory definition of ‘living accommodation’ and so it is given its everyday meaning. Examples of what is clearly ‘living accommodation’ are houses, flats, houseboats, holiday villas and apartments.
By contrast it does not cover accommodation in a hotel room nor other forms of board and lodging. It cover non-residential accommodation such as workshops, garages or offices. These items are all accommodation other than living accommodation.
Exempt accommodation Accommodation provided for the better performance of the employee’s duties or provided by the employer because there is a threat to the employee’s physical security is an exempt benefit (s99 & s100 ITEPA 2003). The exemption would also apply if it is ‘customary’ for employers to provide living accommodation for employees.
HMRC manual EIM 11351 accepts the following classes of employee as receiving exempt accommodation:
police officers and Ministry of Defence police
prison governors, officers and chaplains
clergymen and ministers of religion unless engaged on purely administrative duties
pre-registration house officers before 1 August 2008 (see EIM61012)
members of HM Forces
members of the Diplomatic Service
managers of newsagent shops that have paper rounds, but not those that do not
managers of public houses living on the premises
managers of traditional off-licence shops, that is those with opening hours broadly equivalent to those of a public house, but not those only open from 9 until 5 or similar
stable staff of racehorse trainers, certain key workers who live on the premises or close to the stables
Additionally, exempt accommodation rules also apply in boarding schools where staff are provided with accommodation on or near the school premises. The qualifying personnel are:
other teachers with pastoral or other irregular contractual responsibilities outside normal school hours (for example house masters)
matron, nurse and doctor
(Boarding schools include schools where some of the pupils are boarders.)
From 6 April 2019 HMRC will no longer accept that the ‘customary’ exemption would apply to job-related accommodation provided by employers to employees within the higher and further education sector. Educational sectors that provide purely ‘school-age’ education are not affected by this change.