Employer-provided living accommodation – the customary test

17 January 2019

Employer-provided living accommodation - the ‘customary’ test under s99(2) ITEPA 2003

Several exemptions exist in respect of the employer-provided living accommodation, one of which is set out under s99(2) ITEPA 2003. This is when the accommodation is provided for the better performance of the duties and the employment is one of the kind where it is customary for employers to provide living accommodation.

HMRC provided a reminder in the December 2018 issue of HMRC’s Employer Bulletin for employers who do offer accommodation to employees, that ‘customary’ in this context does not apply to a specific employer alone. A practice is customary if it is recognisable as the norm and if failure to observe it is exceptional. The ‘customary’ test is satisfied where it is the normal practice to provide living accommodation for a class of employee (e.g. in the employment sector).

HMRC guidance confirms that there is no ‘custom’ where less than half of the employees in a particular kind of employment are provided with living accommodation. If this test is not met, and the ‘representative occupier’ provisions do not apply, the amount of the benefit is liable to income tax and employer Class 1A NICs.

Find more about the meaning of ‘representative occupier’.


HMRC’s interpretation of the ‘customary test’ is in line with the case law in Vertigan v Brady (60TC624).