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HMRC internal manual

Employment Income Manual

Living accommodation: meaning of annual value for properties outside the United Kingdom: detail

Sections 105(3) and 110 ITEPA 2003

The legislation uses annual value to calculate the value of the benefit of being provided with living accommodation (see EIM11431). For living accommodation situated outside the United Kingdom the annual value is determined under Section 110 ITEPA 2003 (see EIM11432) as the annual rent at which it could be let for a year unfurnished on the assumption that:

  • the tenant met all the customary tenant’s burdens and
  • the landlord met the cost of repairs, insurance and other landlord’s expenses.

If the cost of the accommodation exceeds £75,000, then the amount of the cash equivalent is calculated in accordance with Section 106 ITEPA 2003 (see EIM11472). As the annual value is based on the open market rental, then under ESC A91b the cash equivalent of the benefit is restricted to step 1 of Section 106.

The question of the period for which living accommodation has been provided is often an issue for properties outside the United Kingdom (see EIM11405 onwards). If the charge is for a period of less than a year apportion the annual rent on a time basis (see example EIM11422).

The onus is on the employer to come up with an estimate of the market rental of the property. He will normally be able to obtain an estimate from a local estate agent in the country concerned.

If you want to check the estimated market rental figure is reasonable get a full description of the accommodation and locality (accompanied, where appropriate, by photographs). (This content has been withheld because of exemptions in the Freedom of Information Act 2000)