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HMRC internal manual

Business Income Manual

Specific deductions: rent and rates: property for employees

Where a trader provides residential premises for an employee, a deduction may be allowed for:

  • any rent paid by the trader, and
  • Council Tax, repairs and insurance.

A deduction will only be allowed to the extent that such expenses exceed any rent paid by the employee or any contribution required from the employee. Where rent paid by the employee exceeds the employer’s costs the profit is income from property in the hands of the employer (see BIM41000 onwards).

As regards the liability of the employee:

  • for general guidance, see EIM11301 onwards
  • where the trader bears any pecuniary liabilities of the employee, for example, Council Tax or utilities, see EIM00580
  • where the employer makes structural alterations, additions or repairs, see EIM21620