Living Accommodation - taxable Benefits Flashcards
(11 cards)
What is job-related accommodation?
A tax-free benefit necessary for the job, provided for better performance, or due to security threats
Job-related accommodation must meet specific criteria to be considered tax-free
What are the three conditions for job-related accommodation to be tax-free?
- Necessary for the job
- Provided for better performance
- Provided due to a threat to employee’s security
These conditions determine the tax status of the accommodation
How is the benefit for rented accommodation calculated?
The higher of rents paid by the employer and the annual value
This ensures the employee receives the maximum benefit from rented accommodation
What is treated as rent paid by the employer?
Lease premium for a lease of ten years or less
Lease premiums are considered in the calculation of the benefit for rented accommodation
How is annual rent paid by the employer calculated?
(Lease premium/Length of lease) + Actual rent paid
This formula is outlined in ITEPA 2003, ss.99 and 100
What is the benefit calculation when the employer owns the property?
The benefit is the annual value
This applies to owned properties provided as accommodation
When is additional yearly rent calculated?
If the property cost more than £75,000
This additional calculation accounts for the higher value of the property
What is the formula for calculating additional yearly rent?
(Cost - £75,000) x ORI at start of year
ORI stands for the official rate of interest, which is used in the calculation
What does ‘Cost’ refer to in the additional rent calculation?
Original cost plus improvements before the tax year
This ensures that the valuation considers enhancements made to the property
What happens if there are more than six years between the property purchase and employee moving in?
The market value at the date the employee moved in is used instead of cost
This adjustment reflects the property’s actual value at the time of occupancy
What type of expenses paid by the employer lead to a benefit for the employee?
Household expenses
These expenses can enhance the overall benefit of the accommodation provided
