HM Revenue & Customs (HMRC) is conducting a review of employer-provided living accommodation, with the call for evidence open until 3 February.
The consultation document, published in December 2015, says approximately 220,000 employees currently reside in accommodation provided by their employer, across all industries.
Employer provided accommodation is a benefit in kind and therefore liable for tax and employer National Insurance contributions, the rules around which have been in place for over 40 years. HMRC is aiming to understand how relevant and appropriate these rules are for modern employers, as part of the Office of Tax Simplification (OTS)’s project to simplify the overall UK tax system.
The consultation document outlines that ‘while the world of work has moved on, the tax rules for employer provided accommodation have not’. The key issues are outlined as follows:
- There is a lack of clarity about what constitutes living accommodation, and when and how the exemptions apply;
- The exemptions are outdated: newer professions are not represented while it ishard to see why exemptions for some occupations still exist;
- As well as being outdated the exemptions appear arbitrary and can result in different tax treatment for employees in very similar jobs which creates complexity and unfairness; and
- Calculating the value of the benefit is inherently difficult – requiring different systems depending on whether the accommodation was owned or rented by the employer and, if the accommodation is owned, there are a number of other variables which affect the taxable value of the accommodation.
Schools with staff accommodation can take part in the consultation and shape future policy by advising:
- Why accommodation is provided
- The type of accommodation provided
- If job roles in the organization still require accommodation
Find out more about the consultation on the government website.