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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Living accommodation: part of premises used for business purposes: overview

Part 3 Chapter 5 ITEPA 2003Where part of the premises are used for business purposes there are two possible ways in which the benefit of living accommodation can be restricted.

  • Where the construction of the premises is such that a separate part is clearly designed and used for business use rather than living accommodation (see EIM11502, example EIM11504 and example EIM11505). An example would be premises consisting of a shop with a flat over it. In such a case the living accommodation does not include the part clearly designed and used for business use. The living accommodation is only the flat above the shop and does not include any of the shop below.
  • Where the construction of the premises is primarily designed as living accommodation even though some rooms are being used exclusively for business purposes (see EIM11503 and example EIM11506). An example would be an ordinary house in which one room was used exclusively as an office. The living accommodation would consist of the whole house but there may be a deduction, equivalent to a Section 336 ITEPA 2003 deduction, from the provided living accommodation benefit.