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HMRC internal manual

Employment Income Manual

Living accommodation: housing for key workers: shared ownership

Shared ownership

For information on the scheme for Key Housing and the Starter Homes Initiative, see EIM21735.

A tax liability may arise with shared ownership. If the employer owns part of the property then there is a benefit. If a third party, such as a RSL, owns part of the property and the property is provided by reason of the employment, then there is a benefit. (See EIM11408 for guidance on “by reason of the employment”.)

The amount of earnings is related to the share in the property, which the employee does not own.

Example 1

Sixty per cent of the property is owned by the key worker and 40% by a third party e.g. RSL or employer, the share in the property cost the employer, RSL etc less than £75,000, the GRV of the property is £1,200.

Answer

The amount of earnings under S105 is £480, 40% of the property’s GRV. [See EIM11431 for the calculation and EIM11432 which explains why GRV (gross rating value) is used.]

If the key worker pays rent of £480 or more per year then the benefit is extinguished.

If the share in the property cost the employer, RSL etc more than £75,000 the amount of the benefit is calculated in accordance with S106 ITEPA 2003.

Example 2

The facts are the same as above but the RSL spent £90,000 in buying a 40% interest in the property in May 2004.

Answer

(See EIM11480 for information on how to calculate the benefit.)

Cost of accommodation £90,000  
     
Less £75,000  
Additional yearly rent of £15,000 × 5% = £750
Plus S105 benefit (GRV) (£1,200 × 40%)   £480
Total   £1,230

If the worker pays rent of £1,230 or more a year then the benefit is extinguished.