Question

Explain the benefits that would arise if a person was to be provided with non-job-related accommodation during 2019/20 (ACCA UK-Tax)

what is the meaning of tax living accommodation benefit is it good thing for employer or employees? can you explain ?

      

Answer 1

There are four aspects to consider where the accommodation provided is not job-related:

• The basic benefit is the annual value of the property. If the property is rented, then the basic benefit is the higher of the annual value and the amount of rent paid.
• There is an additional benefit if the property is owned by the employer and costs more than £75,000. This is calculated as:
  
  (Cost – £75,000) x 2.5% (the official rate of interest).
  
  Cost is the cost of the property plus any subsequent improvements incurred before the start of the tax year. However, where the property was purchased more than six years before first being provided to the employee, then the cost figure is replaced by the market value when first provided (again plus any subsequent improvements).
• If the employer pays for the running costs relating to the property, then the amount paid will also be a taxable benefit.
• If the employer has furnished the property, then the taxable benefit for the use of the furniture is based on 20% of its cost.

2)

Tax living accommodation means If you’re an employee and live in accommodation that your employer provides for you or your relations, you may have to pay tax on the benefit of having the accommodation.

The provision of living accommodation for an employee and/or members of the employee’s family or household gives rise to a taxable benefit unless the accommodation in question is exempt. Where the provision of the accommodation is not within the scope of the exemption, a tax liability arises.

For employer cost of providing living accommodation is allowed as a qualified expense and help in the reduction of taxable income.