Ch.18 - Living accommodation (taxable benefits)

Question 1

What is job related accommodation?

Answer 1

Accommodation which is necessary for the performance of a job.

e.g. caretaker on call outside of normal work hours (essential)
e.g. teacher at a boarding school (customary)
e.g. manager of public housing (better performance)

Question 2

Is job-related accommodation taxable?

Answer 2

No taxable benefit.

Question 3

Employee benefit of employer rented accommodation?
Scenario 1 : Rent paid
Scenario 2: Rent + Lease premium (lease<10yr)

Answer 3

The higher of the ‘rent paid by the employer’ or ‘the annual value of the property’.
(Less employee contributions)

If lease less than 10 years and lease premium paid:
Annual rent = Premium/length + Rent paid

Question 4

Annual value definition?

Answer 4

The rent reasonably expected for letting a property, if the tenant pays for bills and landlord pays for maintenance.
(Value provided in exam)

HMRC may use the ‘gross rateable value’ of the property (old system)

Question 5

Calculate employer owned accommodation benefit?

Answer 5

If ER cost < £75k ,
benefit = Annual value

If ER cost > £75k ,
benefit = Annual value + ‘rent’ - EE contribution
‘rent’ = (cost - 75,000) x 0.02

Question 6

What is the six-year rule?

Answer 6

When the property is purchased by the employer more than six years before being available to the employee.
Use market value instead of cost to employer.