Employer-provided living accommodation – removal of concession for “Representative Occupiers”
01 May 2020
In the latest edition of the Employer Bulletin, for April 2020, HMRC confirmed that from 6 April 2021, changes to extra statutory concessions (ESC) for individuals provided with living accommodation as “representative occupiers” are due to take effect.
Currently, the treatment of individuals provided with living accommodation as “representative occupiers” is identified as an ESC.
“Representative occupiers” can apply to posts which existed prior to 6 April 1977, where an employee:
- Resides in living accommodation provided rent-free by the employer; and
- Is required to reside in this living accommodation and not permitted to reside anywhere else, as stipulated in the contract of employment; and
- Occupies the house for the purpose of the employer, because their employment requires them to reside in that particular accommodation in order to carry out their job duties more effectively
HMRC deals with the collection and management of taxes and may use concessionary treatment which effectively provides a reduced tax liability where a concession is to deal with minor or transitionary anomalies and meeting hardship at the margins.
Following a decision in the Court of Appeal, HMRC committed to review the position of all published ESCs and those not published as ESCs but identified as such. The ESC on “representative occupiers” does not meet conditions laid out for the collection and management of taxes and should either be legislated for or withdrawn.
The government is not going to legislate for this ESC and so it will be withdrawn with effect from 6 April 2021. The timing of the announcement means that both employers and employees who will be affected by this change have sufficient time to make the relevant contractual adjustments. It also means that employers will have time to consult with HMRC on possible entitlement to statutory exemptions for any employees who may be affected by this change. Queries should be submitted to the Employer Helpline, or an employer’s HMRC Customer Compliance Manager, where applicable.
The relevant pages in the Employment Manual have been updated to reflect the withdrawal of the concessionary treatment, and it is advisable for anyone that this may impact to familiarise themselves with the pages.
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