Expenses and benefits: accommodation
What's exempt
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.