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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Living accommodation exemption: customary and better performance

Section 99(2) ITEPA 2003Part 3 Chapter 5 ITEPA 2003 does not apply to living accommodation provided for an employee if:

  • the living accommodation is provided for the better performance of the duties (this is referred to as the better performance test (see EIM11349))
  • and the employment is one of the kinds in which it is customary for employers to provide living accommodation (this is referred to as the customary test (see EIM11347)).This exemption from the benefit charge does not apply to most directors (see


For types of employee accepted as being within the exemption see EIM11351 onwards.

For connected exemptions and relief see EIM11332. There can still be a charge on accommodation services such as heat and light (see EIM11521).