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HMRC internal manual

Compliance Operational Guidance

HM Revenue & Customs
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Supporting Guidance: employer compliance: guidance by subject: working rule agreements (WRA): lodging allowance

You should read background information regarding lodging allowances at EIM71307.

The general principal behind the special tax and NIC arrangements which permit payment of lodging allowance without deduction of tax and NICs, is that employees must be broadly incurring matching expenditure.

WRAs do not provide directly for meal payments but it has always been recognised that a lodging allowance has the following three elements.

  • accommodation
  • breakfast, and
  • evening meal

Lodging Allowances are only payable free of tax and NIC providing certain conditions have been satisfied. See COG930660 for these conditions.

Where there is entitlement to lodging allowances, payment may be made without deduction of tax and NICs no matter how long the employee is on a particular site.

If employers reimburse actual lodging costs see COG930690.