Expenses and benefits: accommodation
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