Expenses and benefits: accommodation
Work out the value
To work out the value of living accommodation follow these steps:
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Use the greater of the ‘annual value’ (as shown in the table below) or the rent you pay.
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If you provide the accommodation only part of the year use that proportion.
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Deduct any rent you get from your employee.
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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’:
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Add anything you spent on improvements to the original buying price.
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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:
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Deduct £75,000 from the cost of the accommodation.
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Multiply what’s left by the official rate of interest - if you only provide the accommodation for part of the year, use that proportion.
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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.