As an employer providing accommodation for your employees, you have certain tax, National Insurance and reporting obligations. What’s included As well as the costs of the accommodation itself, this includes: Council Tax water and sewerage charges heating, lighting and cleaning repair, maintenance and decoration furniture for daily use staff for upkeep of accommodation, for example gardeners and cleaners

You do not have to report or pay anything to HM Revenue and Customs ( HMRC ) on the cost of certain types of accommodation. If it’s domestic or personal Accommodation is exempt if both: you’re an employer who’s an individual, for example a sole trader you’re providing it for someone because they’re a close relative - even if they happen to work in your business It will not be exempt if either: you’re a company or partnership you’d be providing the same sort of accommodation to an employee who was not a family member If it’s provided by a local council Accommodation is exempt if a local council provides it on the same terms that it provides housing to non-employees. If it’s necessary or usually provided for the job Accommodation at the place of work is exempt if: your employees cannot do their work properly without it, for example agricultural workers living on farms an employer is usually expected to provide accommodation for people doing that type of work (for example a manager living above a pub, or a vicar looking after a parish) If you provide the accommodation to company directors, they have to be either full-time or work for a non-profit or charity organisation and hold less than 5% of the shares. If it’s needed for security If you need to provide accommodation to protect an employee because the type of work they do means there’s a special threat to their security, this is exempt. Other charges and costs If the accommodation you provide is exempt, you do not have to report Council Tax, water and sewerage charges to HMRC , or pay National Insurance and tax.

What to report and pay

If the accommodation you provide is not exempt , you must report it to HM Revenue and Customs ( HMRC ). Accommodation This includes any accommodation you provide, even if the employee does not actually use it (see technical guidance for details). You must: report on form P11D pay Class 1A National Insurance on the value of the benefit You can get tax relief if you provide accommodation for an employee at their temporary workplace for up to 24 months. You’ll still need to report this. If you provide accommodation because of coronavirus (COVID-19) If you provide accommodation for an employee at their permanent workplace because of COVID-19, you must also report on form P11D . If you’ve agreed to pay back your employee’s subsistence and lodging expenses because they cannot return home, you can either: report on form P11D report through a PAYE Settlement Agreement if you wish to pay tax and National Insurance contributions on your employee’s behalf Council Tax, water and sewerage charges If your employee covers the cost and you reimburse them, you must: add the amount you reimburse to their earnings deduct and pay Class 1 National Insurance and PAYE tax through payroll If you cover the costs directly, you must: report on form P11D deduct and pay Class 1 National Insurance (but not PAYE tax) through payroll Furniture, heating, lighting, maintenance This covers: heating, lighting, cleaning repair, maintenance, decoration furniture for daily use staff for upkeep, for example gardeners, cleaners You do not need to report furniture, heating, lighting and maintenance costs if the accommodation is for a close relative and it is not related to their job . Do not deduct costs for any structural alterations or repairs that you legally have to make as a landlord. If your employee covers the cost and you reimburse them, you must: add the amount you reimburse to their earnings deduct and pay Class 1 National Insurance (but not PAYE tax) through payroll If your employee arranges the supplier contracts but you cover the costs, you must: report on form P11D deduct and pay Class 1 National Insurance (but not PAYE tax) through payroll If you arrange the supplier contracts and cover the costs directly, you must: report on form P11D pay Class 1A National Insurance on the full costs

To work out the value of living accommodation follow these steps: Use the greater of the ‘annual value’ (as shown in the table below) or the rent you pay. If you provide the accommodation only part of the year use that proportion. Deduct any rent you get from your employee. If the accommodation is shared or only partly used for business use that proportion. The annual value to use depends on where the property is. Country Annual value England and Wales 1973 gross rating value Northern Ireland 1976 gross rating value Scotland 1985 gross rating value divided by 2.7 Outside the UK Annual rental value on the open market Use HMRC’s P11D working sheet if you need help working out the cash equivalent of accommodation benefits. Properties over £75,000 You must add an additional charge to the standard value. To start with you have to calculate the ‘cost of the accommodation’: Add anything you spent on improvements to the original buying price. Deduct any reimbursements by employees from these amounts. If you held an interest in the property 6 years before your employee occupied it and they first occupied it after March 1983, use the value of the property at the time your employee moved in, rather than the original buying price. To calculate the additional charge do the following: Deduct £75,000 from the cost of the accommodation. Multiply what’s left by the official rate of interest - if you only provide the accommodation for part of the year, use that proportion. Deduct any rent you get from the employee. Example Buying price: £175,000 Gross rating value: £1,000 Employee rent: £1,250 Interest rate: 4% The standard reportable value is £0, because the rent is more than the annual rating value. Additional charge is £3,750: £175,000 - £75,000 = £100,000 £100,000 x 4% = £4,000 £4,000 - £250 (left over rent from standard value) = £3,750 Total value to report is £3,750: Standard value (£0) + additional charge (£3,750) Salary sacrifice arrangements If the cost of the accommodation is less than the amount of salary given up, report the salary amount instead. Calculate the cost of the accommodation in the same way as normal, but do not deduct any rent or payment you get from the employee. These rules do not apply to arrangements made before 6 April 2017 - check when the rules will change .

The following guides contain more detailed information about: heating, lighting and cleaning living accommodation - description of exemptions living accommodation - description of annual value

Expenses and benefits: accommodation

Overview

As an employer providing accommodation for your employees, you have certain tax, National Insurance and reporting obligations.

What’s included

As well as the costs of the accommodation itself, this includes:

Council Tax
water and sewerage charges
heating, lighting and cleaning
repair, maintenance and decoration
furniture for daily use
staff for upkeep of accommodation, for example gardeners and cleaners

View a printable version of the whole guide

Expenses and benefits: accommodation

Overview

What’s included

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Expenses and benefits: accommodation

Overview

What’s included

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