6 July is not far off and, in the tax calendar, is the last date for submission of P11D forms reporting taxable benefits to HM Revenue & Customs (HMRC) for the year. With regard to live-in accommodation, a common feature across many farms and estates, calculating that benefit can be a struggle for employers, never mind establishing whether there is a benefit to declare at all.
“The accommodation benefit calculation is complicated and based on a range of factors. Those factors include the cost of providing the accommodation, including any improvements, the date of first occupation, the amount of time the property has been owned, and in certain cases its market value.
“If the employer pays for any other costs associated with the accommodation, for example Council Tax, water rates, heat and light, and provides furniture and internet connectivity, then these also come into the equation.”
There are exemptions available in certain cases;
If employees were treated as ‘representative occupiers’ up to 5 April 1977 then they can continue to be treated as exempt, provided their circumstances have remained unchanged, although this can be difficult to prove in practice.
Necessary for the proper performance of duties:
This is where occupation of a property is essential to the role of the employee. There are limited categories accepted by HMRC which will qualify, although agricultural workers who live on farms and estates can qualify.
Customary and for the better performance of duties:
To meet the ‘better performance’ test it must be demonstrated that by occupying the accommodation the employee can perform their duties better than if they lived elsewhere.
There is also an exemption where there is a special threat to the security of an employee.
Martyn Dobinson says:
“It is acknowledged that these exemptions are starting to appear outdated and meeting the conditions is undoubtedly becoming harder to achieve.”
Where an employer has any doubt as to what should be included on form P11D they should take professional advice.