Where it is necessary for a member of staff to live at his place of work, such as a housemaster in a boarding school, the provision of accommodation is not treated as a taxable benefit for the employee.
However, where it is only customary rather than necessary for a member of staff to live at or close to his workplace, the provision of accommodation will be a taxable benefit unless three conditions are met:
- the accommodation is provided for the better performance of the employee’s duties;
- the employment is one in which it is customary for employers to provide living accommodation to a particular class of employees; and
- the employee is a representative occupier.
HMRC is paying particular attention to the customary test, which must be applied across the trade sector as a whole, not just to the specific employer. If fewer than half of employees in that type of employment are provided with living accommodation, provision of accommodation is not considered customary.
If you have staff who are not being taxed on employer provided accommodation, those arrangements arrangements should be reviewed without delay.
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This note was published from our Spring 2019 Tax Briefing dated March 2019
Please be aware that the information above may have changed in subsequent months.
This note is written for the general interest of our clients and is not a substitute for consulting the relevant legislation or for taking professional advice.