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HMRC internal manual

Employment Income Manual

Living accommodation: provided to more than one employee in the same period: practical points

Section 108 ITEPA 2003 The following is an example of how Section 108 ITEPA 2003 works.

An employer provides a ten room house for the shared use of three unrelated employees. Each employee has sole use of a bedroom and shared use of the other seven rooms. Without Section 108 the cash equivalent of the benefit of the living accommodation provided to each employee would be 80% of the whole house. However Section 108 limits the sum of the charges on the three of them to one full charge on the whole house. If there are no special factors each employee will be chargeable on the cash equivalent of a benefit of 33.3% of the cash equivalent for the whole house.

Section 108 is not relevant in some family situations. For example a husband and wife both work for the same employer and live together in a house provided by their employer. The husband’s job is the one that has accommodation provided with it and the wife’s does not. The true construction here is that the living accommodation is only provided by the employer to the husband and the wife lives in it with her husband as part of normal domestic arrangements. So the full living accommodation charge would be on the husband with no charge on the wife.

By contrast for an example of Section 108 being relevant in a family situation see example EIM11421.