From 6 April 2021 the rules that allow a concession for farm and estate staff who are provided with living accommodation as ‘representative occupiers’ change and Saffery Champness is warning farm and estate businesses not to be caught out. They should review their situation urgently if they have not done so already.
The current concession relates to posts that existed before 6 April 1977, and to successors to those posts. It provides relief from a taxable benefit in kind for employees required to live in the property as a condition of their employment.
Employers providing such accommodation under this concession should consider whether that accommodation becomes a taxable benefit from next month, or whether it continues to qualify as a tax-free benefit under one of the statutory exemptions.
Those statutory exemptions are where the employer-provided living accommodation is either:
- Necessary for the proper performance of duties; or
- Customarily provided for the better performance of duties; or
- Required for the personal security of the employee.
‘Customarily provided’ means it is normal practice to provide living accommodation to at least 50% of employees of that class. HM Revenue & Customs (HMRC) has agreed that many farm workers should be covered by the ‘necessary for the proper performance of duties’ exemption, but there could be issues for other positions such as resident agents, chief executives, estate and farm managers and workers, gamekeepers and property maintenance staff.
“The withdrawal of this concession will affect many rural businesses. Tax-free living accommodation is also regularly provided to former employees in their retirement and HMRC is being actively lobbied to ensure that retired employees are not disadvantaged by the change.
“There will need to be real evidence of proper or better performance of duties, where those exemptions are claimed.”