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HMRC internal manual

Employment Income Manual

Living accommodation: other liabilities in connection with living accommodation: employer's liability providing benefit to employee

Part 3 Chapter 10 ITEPA 2003

Whether or not an employer provides an employee with living accommodation there may be employment income from other benefits and facilities connected with the living accommodation. This page tells you where to find guidance for 2015/16 and earlier in respect of earnings that are only chargeable on those who are not in lower paid employment (see EIM20006 onwards). For information in respect of employment income that is chargeable whatever the level of income see EIM11521.

An employment related benefit can arise for 2015/16 and earlier on those who are not in lower paid employment on the following accommodation services:

  • where the employer is the person liable for paying the bills in respect of expenses relating to the employee’s living accommodation (see EIM21001 onwards). In this case there is no meeting of an employee’s pecuniary liability so there can only be a benefit under Part 3 Chapter 10 ITEPA 2003. An example would be where the employer is the customer of the electricity company for the living accommodation rather than the employee.
  • the provision of furniture and furnishings (see EIM21710)
  • land not included in living accommodation (see EIM21630 onwards).

Note that alterations, additions and structural repairs to the living accommodation do not give rise to a benefit under Part 3 Chapter 10 (see EIM21620). They may affect the measure of the provided living accommodation charge under Part 3 Chapter 5 ITEPA 2003.

For 2015/16 and earlier, where a director or an employee who is not in lower paid employment is provided with living accommodation that is exempt from a provided living accommodation charge (see EIM11331) there is a restriction on the cash equivalent of the benefit on provided:

  • heating, lighting and cleaning and
  • repairs to, or decoration of, the premises and
  • the provision of furniture or other items normal for domestic occupation.

For details of this restriction see EIM21720 onwards. The restriction applies whether the item is provided as a benefit or as a meeting of the employee’s pecuniary liability.