Employment Benefits And Property

When it comes to employment benefits and property, Whitings are here to help!

Property is affected by a large variety of direct and indirect taxes, whether that’s Stamp Duty Land Tax (SDLT), Capital Gains Tax (CGT), Income Tax (IT) or Inheritance Tax (IHT). These tax implications can be triggered by the acquisition, disposal, or letting of properties. However, what is not so commonly known, is the tax implications of employment related property.

We have many clients who are provided with employment related accommodation, and they are not considered to have been provided with a benefit in kind for tax purposes, whereas other clients are.

The following will provide you with examples of the two contrasting outcomes arising from the provision of employment related accommodation as mentioned above.

Accommodation Benefit

Where a dwelling is owned or rented by an employer and is made available to an employee, a taxable benefit is usually triggered.

This will have IT implications for the employee and will also result in a Class 1A National Insurance Contribution (NIC) liability for the employer. The tax and NIC  implications will vary depending on whether the dwelling is owned or rented by the employer. The calculations involved to confirm the taxable benefit are detailed and specialist advice should be obtained in respect of this.

However, in certain circumstances, accommodation provided to employees can be exempt from these rules. No tax charges  arise where:

• It is necessary for the proper performance of the employee’s duties that they should live in the accommodation.
• The accommodation is provided for the better performance of the employee’s duties and the employment is of a kind for which it is customary for employers to provide accommodation for the employee.
• There is a special threat to the employee’s security, special security arrangements are in force and the employee resides in the accommodation as part of those arrangements.

Some examples could include: farmers cottages, educational accommodation for tutors, and military personnel however, the facts of each case would need to be explored.

Reimbursement of relocation costs

Where an employer reimburses employees for the cost of relocating, this benefit can be exempt up to a maximum £8,000. However, there are strict conditions that must be met in order for the exemption to apply. The exemption will often apply where there has been a change in duties and/or location of the employment, for example if the employee is relocated to another office.

The reimbursement exemption covers a wide range of expenditure such as:

• Legal costs associated with the disposal and acquisition of property
• Transportation of belongings
• Travel and subsistence to visit the new area

However, these costs must have been incurred in direct connection with the change in employee’s residence.

Get In Touch

The world of employment related property matters is often complex and requires professional consideration and planning. For further advice or if you are involved in a relevant transaction, contact your local Whitings office today to speak to our specialist property advisers.

Disclaimer - All information in this post was correct at time of writing.