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employee accomodation

employee accomodation

We have a number of new employees who will be relocating in the next two years but in the meantime we are renting a flat that they can use instead of hotels, when they need to be in the office.

They will not be staying on set days and the flat may also be used by board members when visiting.

One of the employees is a director who owns > 5% of the shares.

How do we allocate the benefit in kind?

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09th May 2012 17:16

Time apportion although possibly exempt

You should work out the cash equivalent for the whole house and divide it on a time apportionment basis. HMRC takes this approach.

http://www.hmrc.gov.uk/manuals/eimanual/EIM11411.htm

http://www.hmrc.gov.uk/manuals/eimanual/EIM11421.htm

A couple of other thoughts.

In case you were wondering I don't think you can sucessfully argue that the accommodation expenses are linked to a temporary work place, and therefore tax-free, because the workers intend to relocate and so the new location is a permanent place of work.

However you might have more success in claiming that use of the property is a tax and NI-free benefit because it's part of the employees' relocation costs. Rents for temporary accommodation is certainly within the scope. 

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