National Minimum Wage and employer-provided accommodation: NMW accommodation offset rules (2026-27)

What is the National Minimum Wage (NMW) accommodation offset?

Providing accommodation can be an effective way to attract and retain staff, whether that is farm workers, estate employees, care workers or hospitality staff. However, accommodation is the only benefit in kind that can count towards the NMW calculations, meaning employers need to understand the accommodation offset rules and how they affect minimum wage compliance.

For simplicity, references to the National Minimum Wage (NMW) in this article also include the National Living Wage (NLW), where applicable.

At a glance

• Accommodation is the only benefit in kind that can count towards National Minimum Wage (NMW)
• A daily ‘accommodation offset’ rate is set each April. From 1 April 2026 it is £11.10 per day (maximum £77.70 per week)
• If accommodation is provided without charge, the offset is added to the worker’s pay for NMW purposes
• If accommodation is charged at or below the offset rate, the charge is ignored for NMW
• If accommodation is charged above the offset rate, the excess is deducted from NMW pay – which can easily push an otherwise compliant wage below the legal minimum

Why employer-provided accommodation is treated differently from NMW calculations

Most benefits provided to employees, such as meals, company cars or childcare vouchers, are ignored when calculating whether a worker has received the NMW. Accommodation is the exception.

Where an employer is responsible for providing living accommodation to a worker, the accommodation offset rules may apply. These rules determine how accommodation is taken into account when calculating NMW pay.

The accommodation offset applies where both of the following conditions are met:

• The employer is treated as responsible for providing the accommodation to the worker, and
• The accommodation qualifies as living accommodation.

If either condition is not met, the accommodation offset rules will not apply. Any accommodation related charges would instead need to be considered under the normal NMW deduction rules. Specialist rules can apply where the accommodation is provided by a council or social housing provider. Employers should seek advice where these arrangements are in place.

When is an employer responsible for accommodation under NMW rules?

An employer is regarded as responsible for providing accommodation where at least one of the following applies:

• It owns or rents the accommodation lived in by the worker
• The worker must live in the accommodation as a contractual requirement, their employment depends on them living there, or the accommodation is only provided because they work for the employer
• The employer receives money or other benefit in connection with the accommodation from the landlord or someone connected with the landlord
• The employer and landlord are connected through common ownership, through ownership, management, business relationships or benefits received in connection with the accommodation

What qualifies as living accommodation for National Minimum Wage purposes?

Whether accommodation qualifies as living accommodation depends on the overall circumstances.

Accommodation does not need to meet a particular standard or contain every facility a worker may want. The assessment is based on whether the accommodation is habitable and the facilities available to the worker, either within the accommodation or nearby.

Factors such as sleeping, washing and toilet facilities will be relevant, but no single factor is decisive.

How the NMW accommodation offset works: charges, deductions and pay periods

The accommodation offset rate is set by the government each year. For 2026-27, the rate is £11.10 per day (£77.70 per week).

The accommodation offset is set as a daily rate and is applied according to the number of days for which accommodation is provided during the relevant pay period.

Where the accommodation offset applies, an employer must compare any accommodation charge with the applicable offset amount for the pay period. The outcome then affects the worker’s pay for NMW purposes.

Pay reference periods are particularly important when accommodation charges and payroll cycles do not align. For example, where accommodation is charged monthly, but employees are paid weekly, employer cannot simply compare the monthly charge with the weekly accommodation offset. Instead, the accommodation charge must be apportioned to the relevant pay reference period and compared against the applicable offset for that period. Care may also be needed where employees move into or out of accommodation during a pay period, as the accommodation offset is calculated based on the number of days for which accommodation is provided.

Where accommodation is shared between multiple workers, the position must be considered separately for each worker when assessing NMW compliance.

Accommodation charges can include rent, gas, electricity, furniture and laundry where these costs form part of the charge the worker must pay in order to occupy the accommodation.

How employer-provided accommodation affects NMW calculations

Where living accommodation is provided without charge, a notional amount equal to the accommodation offset rate is added to the worker’s pay when assessing compliance with the NMW.

This does not increase the worker’s actual wages. It is simply an adjustment used when calculating NMW pay.

How accommodation charges affect National Minimum Wage compliance

Where the worker is charged for accommodation, the charge must be compared with the accommodation offset rate.

Employers should also consider how the accommodation costs are collected. Different NMW consequences can arise depending on whether accommodation costs are deducted from wages, paid directly to the employer, or paid to a third party connected with the employer.

If the charge is at or below the accommodation offset rate, it does not affect the worker’s pay when calculating the NMW.

If the charge is higher than the accommodation offset, the excess reduces the worker’s pay for NMW purposes. This can result in an NMW underpayment even where the worker’s headline hourly rate appears to be above the legal minimum.

NMW accommodation offset example for 2026-27: calculating minimum wage compliance

A 25-year-old employee is paid £13 per hour and works 40 hours a week, giving weekly pay of £520. The employer also provides accommodation and charges £150 a week.

The weekly accommodation offset for 2026-27 is £77.70. As the accommodation charge exceeds this amount, the excess (£72.30) reduces the pay that counts for NMW purposes.

For NMW calculations, the worker’s pay is therefore treated as £447.70 rather than £520. Dividing this figure by the 40 hours worked produces an effective hourly rate of £11.19 for NMW purposes. So, although the employee’s contractual pay rate is £13 per hour, the accommodation charge means their pay counts as £11.19 per hour when testing compliance with the NMW, which is below the applicable minimum wage rate of £12.71 per hour.

This example illustrates why accommodation arrangements should be reviewed regularly. A worker whose headline pay appears above the NMW may be underpaid once the accommodation offset rules are applied.

Reviewing accommodation arrangements to avoid NMW underpayments

There is no limit on the amount an employer can charge for accommodation. However, employers must always ensure that workers continue to receive at least the applicable NMW once the accommodation offset rules have been applied.

Particular care may be needed where:

• Accommodation charges are deducted directly from wages
• Accommodation is provided through connected companies or individuals
• Workers moving into a higher minimum wage age band can create compliance issues where accommodation charges remain unchanged
• Accommodation charges increase
• National Minimum Wage rate increases from 1 April each year
• Working hours fluctuate significantly between pay periods

Getting the accommodation offset calculation wrong can result in NMW arrears, financial penalties and reputational consequences.

Regular reviews can help identify issues before they develop into compliance problems.

How Saffery can help ensure you’re NMW compliant

Saffery can help employers review accommodation arrangements, assess the impact of accommodation charges on NMW compliance and identify potential risks. We can also help put processes in place to manage ongoing compliance as accommodation and minimum wage rates change.

If you would like to discuss your NMW compliance, please get in touch with your usual Saffery contact or use this form to get in touch.