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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: working rule agreements (WRA): lodge payments paid direct by employers

Payments of lodging allowance made free of tax and NICs under a WRA do not cover employee’s accommodation costs paid direct to hotels (or other establishments) by employers.

Nevertheless if employees are entitled to lodge allowances COG930660 you should

  • check whether the accommodation costs paid direct exceed the WRA specified lodge rate and only when they do
  • seek recovery on the excess (note that the excess is a benefit in kind for tax purposes, and for NICs the particular Class of NICs due will depend on who has the contract with the accommodation provider).