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HMRC internal manual

Employment Income Manual

Travel expenses: general: scale of expenditure: accommodation

Section 338 ITEPA 2003An employer may provide an employee on secondment at a temporary workplace with furnished living accommodation or with a cash allowance out of which the employee can obtain living accommodation. This guidance explains what limit ought to be placed on the relief under Section 338 ITEPA 2003 for the cost of living accommodation.

Where the employee stays in a hotel or boarding house, relief should be permitted in full for the costs actually incurred where the accommodation is of an appropriate standard. The appropriate standard can reflect the seniority of the employee, the availability of accommodation and the nature of the employment.

In many cases furnished or unfurnished accommodation is obtained as a cheaper and more convenient alternative to hotel accommodation. Provided that the total cost of the accommodation is appropriate to the business need and is reasonable and not excessive you should permit relief in full. The total cost may include the reasonable cost of furniture where that is properly attributable to the business travel. The cost should be accepted as reasonable where the total cost of providing accommodation does not exceed the cost of hotel accommodation of an appropriate standard. You should only restrict relief in extreme cases.

You may need to restrict relief in those cases where the standard of accommodation provided does not result from the need to provide the employee with necessary accommodation while at a temporary workplace. For example, if accommodation is supplied in part because the employee is accompanied by his or her family, or the location of the accommodation is determined by reasons of non-business convenience and there is an increase in costs as a result, relief ought to be restricted. It cannot be assumed that accommodation of a similar standard to the employee’s home will always be reasonable.

Relief should not be restricted for furnished or unfurnished accommodation that is of reasonable cost where it is also able to be used by the employee for weekends, short holidays during the period of work at the temporary workplace, or other short non- working periods. Relief should be restricted where significant non-business use is part of the purpose of providing the accommodation.

The limits to be placed on relief are illustrated by the examples in EIM31838.