people

Accommodation benefit

Customary/tax changes from April 2019 for higher/further education providers

Caroline Harwood, Partner, Head of Share Schemes and Employment Tax
31/07/2019
people
HMRC have issued a notice to all higher/further education providers saying they will no longer accept that in these sectors accommodation is customary from 6 April 2019.

What to consider

Remember under Section 99(2) ITEPA 2003 for this exemption it must be customary and for better performance to be tax exempt. This HMRC note may well therefore impact the position going forwards with regard to how any accommodation you provide is taxed and we would suggest you consider as soon as possible how this may affect the analysis you are currently working on around these areas.

It may be possible for some to rely on the representative occupier exemption. This exemption was given when the current legislation was enacted in 1977. Those who were defined as representative occupiers prior to April 1977 would continue to receive accommodation tax free provided that the circumstances were unchanged and the following conditions are met.

  • The employee lives in a house provided rent free by the employer.
  • The employee, under the terms of their contract is required to reside in that particular house and is not allowed to reside anywhere else.
  • The employee’s occupation of that house is for the purpose of the employer, the nature of the employment being such that the employee is required to live in it for the better performance of their duties.

Will you be affected?

This exemption may apply those who succeed to the post where it was first regarded as carrying representative status, provided that the circumstances surrounding the provision of the accommodation had not changed and that the required conditions were met. You may wish to take the opportunity to consider whether your institution will be affected by the potential changes post April.

You may find this link helpful Employment Income Manual on GOV.UK website. 

How we can help

We can help you determine the impact. If you have immediate questions on the above please contact Caroline Harwood or Simon Herbert.

Contact us

Caroline Harwood
Caroline Harwood
Partner, Head of Share Plans and Employment Tax
London
simon herbert
Simon Herbert
Director, Employers Advisory Group
London