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8. Taxable benefits 8.1. Principles The amount assessed is generally the cost of providing the benefit.
Where in-house benefits are provided (free air travel for employees of a airline company) the amount
assessed is the marginal cost incurred by the employer.
8.2. Vouchers exchangeable for goods and services unless specifically exempt. 8.3. Living accommodation (a)
There is no taxable benefit if the accommodation is job-related:
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where it is necessary for the proper performance of the employee’s duties (e.g. a
caretaker); or
‣
for better performance of the employee’s duties and (for that type of employment) it is
customary for employers to provide living accommodation (e.g. hotel-worker); or
‣
where there is a special threat to the employee’s security and he resides in the
accommodation as part of special security arrangements.
(b)
If the accommodation is not job related then the benefit is the higher of:
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the accommodation’s annual value, and
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the rent actually paid for it by the employer (if the property is rented).
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The benefit is reduced by any rent or contribution paid by the employee.
(c)
There is an additional benefit where the cost of providing the accommodation is greater than
£75,000;
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(cost of providing accommodation – £75,000)
×
the official rate of interest (2%)
‣
The cost of providing the accommodation is the purchase price of the property plus
expenditure on improvements incurred before the start of the tax year.
(d)
If the employer bought the accommodation more than six years before first providing it to the
employee, the property’s market value when first occupied by the employee is used in the
calculation instead of purchase price but note that if the cost is less than £75,000 there is no
expensive accommodation benefit irrespective of the market value when the employee first
occupied the property.
