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bigduckontax
bigduckontax, Accountant
Category: Tax
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, I have just started living in a house rented by my employer.

Customer Question

Hi, I have just started living in a house rented by my employer. The rent the company pays is 5000 per month plus utilities and council tax. I get one bedroom out of 3, and shared toilets/shower/communal. The director uses the property whilst in town, and the other person is in the same position as me. I have to work from home, as well as the company office as they work to all time zones and I need to be available 24/7. My salary is 22000, plus accommodation. What is my tax liability, how do I calculate this, what information should I be asking from my employer, how do I pay this, and what pitfalls are there to be aware of? Thank you!
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
There is no requirement for you to need to calculate your tax liability for in reality you do not have to physically pay it. Your employer will notify HMRC of the position annually when he completes the Form P11D with his employers tax return. Your tax code will then be adjusted by HMRC to reflect the benefit.
A very full explanation can be found here:
http://www.crowehorwath.net/uk/news/living_accommodation__another_brick_in_the_wall.aspx
but I warn you that the provision of loving accommodation is one of the most complex within the PAYE regime. The link I have given you is a good read for a wet Sunday afternoon.
I do hope I have helped shed some light on your query with this brief explanation.
Expert:  bigduckontax replied 2 years ago.

A further very full explanation of the position is given here:

http://www.butler-co.co.uk/articles/Tax-free-accomodation.pdf

There is a good summary of whether the benefit is taxable at all:

'The Revenue will accept that the ‘better performance’ test is met where:

● the employee is on call outside normal hours; and

● he is in fact called out ‘frequently’ (not defined); and

● ‘the accommodation is provided so that the employee may have quick access to the place of employment or other place to which the employee is called’ (EIM 11350 Living accommodation: practical consideration).'

It sounds from the tenor of your question that you may incur no tax liability from your occupation of the residential accommodation.

Small amendment to my original answer: line 5; delete 'loving,' insert 'living.'

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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.