Part 4U.K.Employment income: exemptions
Chapter 11U.K.Miscellaneous exemptions
Living accommodationU.K.
313Repairs and alterations to living accommodationU.K.
(1)This section applies where living accommodation is provided by reason of a person’s employment.
(2)No liability to income tax arises by virtue of Chapter 10 of Part 3 (taxable benefits: residual liability to charge) in respect of—
(a)alterations and additions to the premises which are of a structural nature, or
(b)landlord’s repairs to the premises.
(3)In this section “landlord’s repairs” means repairs of a kind which are the obligation of the lessor under the covenants implied by section 11(1) of the Landlord and Tenant Act 1985 (c. 70) (lessor’s repairing obligations in short leases) where premises are let under a lease to which that section applies.
314Council tax etc. paid for certain living accommodationU.K.
(1)This section applies if living accommodation provided for an employee falls within the exception in one of the following provisions—
section 99(1) (accommodation necessary for proper performance of duties),
section 99(2) (accommodation provided for better performance of duties), or
section 100 (accommodation provided as a result of security threat).
(2)No liability to income tax arises by virtue of—
(a)any payment to, for or on behalf of the employee, or
(b)any reimbursement of any payment by the employee,
in respect of council tax or rates, or water or sewerage charges, in respect of the accommodation.
315Limited exemption for expenses connected with certain living accommodationU.K.
(1)This section applies if—
(a)living accommodation is provided for an employee in a tax year, and
(b)conditions A and B are met.
(2)Condition A is that the accommodation falls within the exception in one of the following provisions—
section 99(1) (accommodation necessary for proper performance of duties),
section 99(2) (accommodation provided for better performance of duties), or
section 100 (accommodation provided as a result of security threat).
(3)Condition B is that there is an amount of earnings from the employment in the tax year by virtue of expenditure, or the reimbursement to the employee of expenditure, on—
(a)heating, lighting or cleaning the premises,
(b)repairs to the premises, their maintenance or decoration, or
(c)the provision in the premises of furniture, equipment or other items which are normal for domestic occupation.
(4)If this section applies, no liability to income tax arises in respect of the earnings mentioned in subsection (3) to the extent that they exceed—
where—
DA is the number of reckonable days in the tax year (a “reckonable day” being a day on which—
(a) the accommodation is provided, and
(b) the employment is held by the employee),
DE is—
(a) the number of days in that year, or
(b) if the employment is held for only part of that year, the number of days in that part,
NE is the net amount of the earnings from the employment in the tax year (see subsection (5)),
SMG is, where the expenses are incurred by a person other than the employee, so much of any sum made good by the employee to that other person as is properly attributable to the expenses.
(5)To calculate the net amount of the earnings from the employment—
Step 1
Take the earnings from the employment, leaving out of account the expenses in question.
Step 2
Add, in the case of employment by a company, the earnings from any employment by an associated company.
A company is “associated” with another for this purpose if one has control of the other or both are under the control of the same person.
Step 3
Deduct any deductions allowable under—
(a)section 232 (giving effect to mileage allowance relief) or Part 5 of this Act,
[F1(b)sections 188 to 194 of FA 2004 (contributions to registered pension schemes), or]
(c)section 262 of CAA 2001 (capital allowances to be given effect by treating them as deductions from earnings).
Textual Amendments
F1Words in s. 315(5) substituted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 35 para. 59 (with Sch. 36)