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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: working rule agreements (WRA): caravan accommodation provided by employer

Where an employer provides caravan accommodation at or near sites and the employees qualifies for a tax and NIC free lodging allowance, a lodging allowance, which roughly amounts to the cost of an evening meal and breakfast, can be paid without deduction. This reflects the general principles described at COG930650.

Where caravans are provided you may find that employees are paid:

  • the full amount of lodging allowance, from which they repay a proportion as caravan rental, or
  • a reduced rate of lodging allowance after a deduction has been made for the rental.

These amounts may be treated as tax and NIC free unless it is clear that

  • the rental element is simply a nominal sum, and
  • the payments for meals are not matched by expenditure.

You should

  • check that the employee qualifies for the tax and NIC free lodging allowance COG930660 
  • be satisfied that

    • the rental payment or amount of reduction in the lodging allowance is made and reflects a reasonable charge for the accommodation, and
    • the reduced rate of lodging allowance is expended by the employee on meals. ((This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • make a note of the rental or reduction on form CIT306.

If the you are unsure whether the lodging allowance should be paid without deduction, or the employer disagrees with your view, you should follow the guidance at COG930730 

Caravans provided by employees are covered at COG930740.