When living accommodation is provided by way of employment a benefit in kind will arise, subject to certain exemptions. This document discusses the calculation of the benefit, including where the cost of the property is over £75,000. It also covers the new rules on salary sacrifice, the situation where the employee pays rent for the use of the property, and the various exemptions available.


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 p;relation to living accommodation.

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