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HMRC internal manual

Employment Income Manual

Removal or transfer costs: expenses and benefits to which Section 271 ITEPA 2003 applies: travel and subsistence: temporary living accommodation

Section 287 ITEPA 2003

The exemption in respect of temporary living accommodation applies where the employee intends to move to permanent accommodation to complete the relocation. So for an employee who lives in a hotel until the old home is sold and a new home purchased, or who moves into a rented house at the new location for the same reason, the hotel and the rented property represent temporary living accommodation.

But where a person is posted to a new location and moves into accommodation that he or she occupies for a considerable period as his or her main residence, the provision of the accommodation will not be eligible for exemption. For example an executive from the USA who is posted to London and who moves into a rented flat there is not occupying temporary living accommodation unless it can be seen that he or she intends to acquire somewhere else as permanent accommodation.

Many overseas postings are for limited periods of one, two or three years: the accommodation that the employee intends to occupy for the duration of the posting is the permanent accommodation for this purpose.

Where the employer provides temporary living accommodation in a hotel or similar, the measure of the benefit to be charged or counted against the £8,000 limit is the cost to the employer. Where the accommodation counts as living accommodation for the purposes of Part 3 Chapter 5 ITEPA 2003 the measure of the benefit is the amount that would otherwise be chargeable under Part 3 Chapter 5 (see EIM11431 and EIM11472).