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.

Points discussed within this guidance note:

> Introduction

Job related accommodation, or living accommodation provided for the employee by the employer, is accommodation provided by an employer for which in certain circumstances a statutory tax exemption is available.

> Living accommodation

A tax liability arises on the provision of accommodation to an employee if accommodation is provided by reason of the employee's employment, whether or not the accommodation is provided by the employer. The cash equivalent of the benefit should be treated as earnings.

> Calculating the benefit

Under ITEPA 2003, s 102, three grounds give rise to the job related accommodation being a benefit, including the accommodation beUnder ITEPA 2003, s 102, three grounds give rise to the job related accommodation being a benefit, including the accommodation being provided to the employee rent-free, or at a rent less than the amount paid by the provider.

> Cost of the property

The calculation for the cost of providing the accommodation to the employee is calculated using two different methodologies depending on whether the value of the property is over or under £75,000. The benefit may be apportioned where either the accommodation is made available to a number of employees or where it is only  available for part of the tax year.

> Cost of providing the property is £75,000 or less

> Cost of providing the property is more than £75,000

> Market value

> Cost

> The calculation

> Apportioning the benefit

> Several employees

> Limited period of time

> Only part of accommodation available

> Part of accommodation used for business purposes

> Accommodation and interaction with salary

> Accommodation and interaction with salary

> Rent allowances or extra salary

> Right to higher salary

> Deduction of rents

> Preventing a double tax charge

> Exemptions

> Section 99 exemptions

> Necessary for the proper performance of duties

> Customary and better performance of duties

> Directors

> Sections 100 and 100A exemption

> Special security threat

> Living accommodation provided outside of the UK

> Non-statutory exemptions

> Representative occupiers

> Associated costs

> Local authorities

> Tax avoidance

> Reporting requirements

> Living accommodation

> Rent allowances or extra salary

> Deduction of rents

> Salary sacrifice

> Future changes to the taxation of living accommodation

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