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HMRC internal manual

Employment Income Manual

Termination payments and benefits: Section 401 ITEPA 2003: benefit of living accommodation received on or after 6 April 1998: cash equivalent

Section 415(7) ITEPA 2003

The benefits code is being used here only in order to find the cash equivalent of the benefit for the purposes of Section 401 ITEPA 2003. None of the other rules in the benefits code are relevant and should not be applied. For example, EIM11341 gives guidance about an exception from the living accommodation charge where an employee shows that residence in the accommodation is necessary for the proper performance of the duties of an employment. That provision has nothing to do with calculating the cash equivalent and so is not applied for the purposes of Section 401. Whether a person is chargeable under Section 401 ITEPA 2003 depends only on the rules concerning the scope of Section 401 itself (see EIM13000).

Subject to that, and with one difference, the cash equivalent of the benefit of living accommodation for the purposes of Section 401 ITEPA 2003 is arrived at in the same way as in the benefits code (see EIM11401 and associated guidance).

The difference applies where the cost of the accommodation exceeds £75,000 (see EIM11475) and the sum made good by the employee or ex-employee is greater than the rental value (see EIM11431 first bullet). In such a case, the subtraction in step 4 in EIM11480 is that excess.