Accommodation Offset salary deduction

Can the accommodation offset be a gross salary deduction?

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A client provides an employee with accommodation (Care setting).  The client wants to deduct rent from the employee at the employee offset rate (£9.10 per day £63.70 PW).  I am assuming that the employer offset rate is only used for the purposes of minimum wage calculation.  Consequently, if rent is deducted at the offset rate, it will be a net salary deduction subject NI and PAYE not a gross salary deduction.

My client believes the employer offset rate should be a gross deduction from salary as if no rent were paid the employer offset amount would be added to gross salary for minimum wage calculations.

Thanks for your help.

 

 

National Minimum Wage and Living Wage: accommodation: Accommodation rates - GOV.UK (www.gov.uk)

Replies (4)

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By Truthsayer
05th Feb 2024 10:15

Is the accommodation necessary for the proper performance of duties? Is it provided for the better performance of duties, and is it customary in the industry to provide it?

It may well be that it is deductible from net pay regardless of the above, but this is a starting point.

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By FactChecker
05th Feb 2024 12:59

You are certainly correct on your first point - namely that the Accommodation Offset is entirely a figure used within the calculations to determine whether or not NMW/NLW has been breached. It's worth noting that the interaction between that figure and the calculation is not always straightforward (for simple examples see https://www.litrg.org.uk/working/employment-status/employment-rights/nat... but don't forget to check whether utilities are charged separately and so on).

However the nub of your question is interesting (a euphemism for 'I don't know the answer')!
My default position would be the same as OP ... to paraphrase - 'it's a deduction and, unless you can show me a legislative basis for taking it from gross pay, then it must be a post-tax deduction'.
But I also follow the logic of OP's client (whilst pointing out that logic and tax are not always comfortable bedfellows).

I'll see what I can find out ... and await others' insights with interest.

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Replying to FactChecker:
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By FactChecker
05th Feb 2024 13:41

Not having much luck ... all I've found so far is ITEPA 2003 Part 3 Chapter 5 (Taxable benefits: living accommodation) which, not surprisingly, is all about the potential benefit - not the treatment of a deduction from pay.
Anyone care to point a disjointed brain back on to the right track?

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By Tax Dragon
05th Feb 2024 20:17

The NMW/NLW calculations ignore tax; there's no PAYE or NIC reduction for the rent deduction; the rent deduction could be taken into account were there a living accommodation BIK.

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