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HMRC internal manual

Employment Income Manual

Living accommodation: measure of benefit

Sections 102, 103 and 108 ITEPA 2003

For a benefit to arise under Part 3 Chapter 5 ITEPA 2003 the employee needs to be both provided with living accommodation and to be employed. Section 102 describes this period during which the benefit arises as the taxable period.

Employment includes those who are office holders, such as directors and shadow directors.

You should already have considered whether there is a benefit under Part 3 Chapter 5 ITEPA 2003 (see EIM11302).

The cash equivalent of the benefit depends upon the cost of providing the living accommodation. If the cost:

  • is £75,000 or less then it is calculated under Section 105 ITEPA 2003 (see EIM11431)
  • exceeds £75,000 then it is calculated under Section 106 ITEPA 2003 (see EIM11480).

For the definition of the cost of providing the living accommodation see EIM11429. The cash equivalent of the benefit is treated as earnings from the employment for the year.

If the same living accommodation is provided to more than one employee at a time, then the total of the cash equivalent of the benefits for all of those employees to whom the accommodation is provided cannot exceed the amount of the benefit if there had been only one occupant. Under Section 108 ITEPA 2003 the benefit is shared between the occupants in whatever way is just and reasonable (see EIM11410).