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HMRC internal manual

Employment Income Manual

Living accommodation exemption: the better performance test

Section 99(2) ITEPA 2003One of the two conditions of Section 99(2) ITEPA 2003 which prevents Part 3 Chapter 5 ITEPA 2003 from applying to provided living accommodation is that of better performance (see

EIM11346). The test is an objective one. The employee has to show that by occupying the accommodation provided the employee really can perform the duties better than if the employee lived elsewhere.

The test is not satisfied merely because accommodation is provided close to the place of employment so that the employee can get to work more easily. The duties of an employment do not normally begin until the employee arrives at the place of work. The distance the employee has to travel does not therefore affect the performance of those duties. Consequently it is necessary to look at the duties, if any, that are performed outside the employee’s normal hours (including any normal unsocial hours) of attendance at the place of employment.

For details of how to decide if the test is met in practice see EIM11350.