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Clergy / Minister of Religion - free home post retirement?

Clergy / Minister of Religion - free home post...

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I have a client who is a minister of religion about to retire as he nears 65. Not one of the mainstream churches, but PAYE applied.  The church wants to give him the house they own which has been the manse.  I have had to tell them that this would be taxable in full at market value.

If they let him live on in the house, rent-free, after he retires, will this be taxable on him?

If so will this be on the market rent for such a house?  (It seems the employe benefit-in-kind calculations at EIM11480 would not apply as he will no longer be an employee.)

I presume their only other options for funding his retirement would be to pump money into a pension plan (then 25% tax-free sum available) or simply keep him on the payroll.

Thanks for thinking about this post.

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By MJShone
21st Sep 2011 12:40

Employer Financed Retirement Benefit Scheme

Apoloogies in advance for very brief post but hopefully this will point you in the right direction. What you have, if the former employer provides accommodation in retirement,  is an Employer Financed Retirement Benefit Scheme. Pre 2006 if only non cash benefits were provided, they weren't caught. Now they are within s393 of ITEPA. HOWEVER - there are exceptions. See, in your particular case, SI 2007/3537 - EFRBS (Exccluded Benefits for Tax Purposes) Regs 2007 which covers living accommodation that fits the criteria. If he's living in the same house as he lived in as an employee (and he qualified for exemption as an employee) you shouldn't have a problem, even if it is rent free. Start at EIM15020, particularly 15022

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