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HMRC internal manual

Employment Income Manual

Tax treatment of public house managers: expenses connected with living accommodation where accommodation is exempt from charge; HMRC agreement for a flat rate benefit

Section 315 ITEPA 2003

In circumstances where living accommodation provided by an employer to a live-in public house manager is exempt from an Income Tax charge (see EIM11331), the amount that has to be reported as a benefit for expenses connected with the living accommodation for which the pub manager bears no costs is subject to a ceiling of 10% of the net earnings the pub manager receives from the employment.

The expenses concerned relate to heating, lighting, cleaning, repairs, maintenance/decoration and provision of furniture, equipment and other items required for normal domestic occupation.

The 10% ceiling does not apply to pub employees in other accommodation off site which an employer provides and where free light, heat, etc is also provided. In that case the benefit of free utilities provided by the employer must reflect the full cost incurred by the employer in providing these facilities.


If a pub manager received total net earnings of £12,500 per annum (the figure excludes the benefit of provided living accommodation because it’s exempt from an Income Tax charge) and the connected expenses in respect of the accommodation are £1,295 in the year, the amount of those expenses to be reported under section 315 is restricted to £1,250 (10% of £12,500).

HMRC agreement for public house managers

To avoid the requirement for live-in public house managers to calculate the benefit under s315 according to the strict letter of the law (as set out above), HMRC agrees annually with the Licensed Victuallers’ Association a flat rate figure which can be reported by all live-in public house managers to represent the amount of the benefit of the connected expenses provided free of charge. The figures are set out below.

Tax year Amount to be reported as a benefit
2017 to 2018 £1,330
2016 to 2017 £1,300
2015 to 2016 £1,295
2014 to 2015 £1,295
2013 to 2014 £1,275
2012 to 2013 £1,240
2011 to 2012 £1,200
2010 to 2011 £1,150