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HMRC internal manual

Employment Income Manual

Particular benefits: heating, lighting, cleaning etc. expenses of job-related living accommodation: 10% limit: example of calculating the net amount of the earnings: employee makes good part of the expense of providing the benefits

The employee’s salary is £15,000 a year.

The employee is entitled to a deduction of £800 for expenses within Section 336 ITEPA 2003 (see EIM31620 onwards).

In the year the employer paid £1,650 for heating, lighting and internal decorations of the job- related accommodation (exempt under Section 99 or 100 ITEPA 2003 (see EIM11331) but the employee reimburses the employer £350 of this expenditure. So the net cost to the employer was £1,300 (£1,650 - £350).

The employment income will be:

Salary 15,000
less deductible expenses 800
Total 14,200
Heating, lighting and internal decorations:  
10 per cent of £14,200 = 1,420, less “made good” £350 = £1070  
£1,070 is less than the net cost of £1,300 1,070
Employment Income 15,270