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If you鈥檙e an employee and live in accommodation that your employer provides for you or your relations, you may have to pay tax on the benefit of having the accommodation.

Living accommodation includes houses, flats, houseboats, holiday homes and apartments. It does not include hotel rooms or board and lodgings, for example, where you have to eat out or do your laundry elsewhere.

1. Accommodation you pay tax on

You鈥檒l pay tax on your living accommodation regardless of the amount of income that you receive, unless you qualify for an exception.

2. Accommodation you do not pay tax on

You do not pay tax on your living accommodation if you qualify for an exception, for example, if:

• the accommodation is necessary for you to do your job properly
• it鈥檚 customary to have living accommodation with the job and it means you perform your job better
• you face a special threat to your security because of your job, and the living accommodation is in place to help protect you

Examples of occupations that can provide tax exempt living accommodation are:

• agricultural workers living on farms or estates
• lock-gate and level crossing gatekeepers
• stewards and green-keepers who live on the premises
• pub and off-license managers who live on the premises
• resident caretakers and wardens of sheltered housing who live on the premises and are on call 24 hours a day
• police officers and Ministry of Defence police, members of HM Forces and the Diplomatic Service
• prison governors, officers and chaplains
• clergymen and ministers of religion, unless engaged on administrative duties only
• managers of newspaper shops that have paper rounds only
• boarding school head teachers and other teachers with pastoral responsibilities outside normal school hours
• vets who live close to the practice and who respond regularly to emergency calls
• managers of camping and caravan sites living on, or near to, the premises who respond regularly to emergency calls
• stable staff and key workers of racehorse trainers who live close to the stables

2.1 How to work out the lease premium

If your employer leases the property you live in, and they pay a lease premium as part of that lease, the tax you pay on the benefit of this accommodation may include an amount for the lease premium as well as the rent. This will happen if the lease on the property is for 10 years or less and it began (or was extended) on or after 22 April 2009.

The lease premium part is spread over the length of the lease and worked out as A 梅 B 脳 C where:

• A is the number of days in the tax year that the employer provides accommodation
• B is the term of the lease (in days) taking into account any leap years
• C is the total amount of lease premium the employer pays

2.2 Example

On 1 October 2024, your employer leases a property and provides you with rent-free accommodation from that date. The lease is for 5 years and does not contain a break clause. Your employer pays rent of 拢120 a year and a premium of 拢70,000.

For the tax year 2024 to 2025:

• A is 187 days (1 October 2024 to 5 April 2025)
• B is 1,826 days
• C is 拢70,000

The following is a calculation to work out聽the lease premium.

The amount of lease premium to be attributed will be A 梅 B 脳 C = 拢7,168.

On the聽working sheet, put 拢7,228 in box A. This is 拢60 rent for 1 October 2024 to 5 April 2025 plus 拢7,168 lease premium.

For further information about leases with break clauses, read the聽Employment Income Manual.

3. Representative occupiers

HMRC announced in March 2020 that the treatment of individuals provided with living accommodation as 鈥榬epresentative occupiers鈥� had been identified as an Extra Statutory Concession (ESC) and the government decided to withdraw the聽ESC聽with effect from 6 April 2021.

The representative occupier聽ESC聽did not extend to retired employees under Employer-Financed Retirement Benefit Schemes (EFRBS) legislation. If you received living accommodation from your employer 鈥� as a representative occupier 鈥� prior to retirement and continued to receive this benefit post retirement, there will be tax and National Insurance contributions due on this benefit.

Guidance on聽how to report relevant benefits under an聽EFRBS聽is available.