A client of mine owns a flat where 2 employees live rent free.
Their previous accountant has used a Gross Rateable Value (GRV) of £250 + additional yearly rent (cost - £75k xORI) to caluclate BIK for previous years.
Am I right in thinking that the GRV here is not applicable since this is not a commercial property and instead rent which might reasonably be expected to be obtained on letting this flat (market value) should be used, the latter will be greater (c£6,600 per annum)?
The total benefit then should be divided by 2 to calculate BIK for each employee.
I will be grateful if someone clarifies this for me.
Many thanks
T
Replies (1)
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GRV OK
Funnily enough, I've advised an accountant on this very recently! Seems too good to be true but the measure is Gross Rating Value (even though this is not a commercial property) which is likely to be considerably less than open market rent. See here for guidance:
http://www.hmrc.gov.uk/manuals/senew/SE11434.htm
If there's no GRV because the property is too new, the employer should provide an estimate for agreement with the DV - otherwise HMRC will ask the DV to will come up with their own value.
Cathy