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HMRC internal manual

Employment Income Manual

Living accommodation exemption: homes outside the United Kingdom owned through a company: exceptions in section 100B ITEPA 2003

EIM11372 explains that section 100B ITEPA provides for exceptions from the exemption in section 100A. If any of the section 100B exceptions apply, the exemption will not apply and the cash equivalent of the benefit of the accommodation will need to be returned in accordance with the rules in Part 3 Chapter 5 ITEPA.

The tax charge will still arise if any of the following apply:

Section 100B(2)The company acquired its interest in the property from a connected company at undervalue or its interest in the property derives from an interest that was so acquired.

Section 100B(3)A connected company directly or indirectly incurs expenditure on the property or directly or indirectly lends money to the company after the company has acquired the property.

This does not apply to any borrowing from a connected company if the company pays a commercial rate of interest or to any borrowing which results in the director or other officer of the company being treated as receiving a taxable benefit.

Section 100B(4)The living accommodation is provided in pursuance of an arrangement the main purpose, or one of the main purposes, of which is the avoidance of tax or national insurance contributions.

In this context tax means UK income tax or UK corporation tax.