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Act Now to Get Your House in Order - HMRC Consult on Staff Accommodation

on Tuesday, 12 January 2016.

The arrangements relating to staff accommodation have been a hot topic over the last few years for schools since the Office of Tax Simplification (OTS) was asked by the coalition government to advise on simplifying the tax system for employee benefits.

This is a topic that we have covered at our Practical Strategies and Annual conferences over the last year or so.

As a recap, OTS issued two reports in 2014, which recommended various proposals to change the taxation regime. These included a tightening of the current provisions exempting staff living in employer provided accommodation, because it is customary and for the better performance of their duties, with the focus instead in the future to be on whether the accommodation is 'necessary for the job'.

OTS had found that there was a lack of consistency in how some of the tax exemptions for accommodation worked, and that some of the exemptions appeared to be arbitrary. They also found that the rules around calculating the level of the benefit were often very complex and involved different systems depending on the age and value of the property and several other factors.

We had expected to see some of the proposals for reform taken forward last year but the 2015 general election and change of government caused a delay in the Treasury issuing their formal response to the OTS recommendations.

New Consultation

Last month, there was finally some news from the Treasury and they have issued a consultation document seeking views from interested parties on proposed reforms to the tax treatment of staff accommodation. The consultation takes the form of 16 questions and these generally cover the following themes:

  • Why is accommodation provided to employees?
  • What type of accommodation is provided to employees?
  • Do any jobs (still) require accommodation to be provided?

The deadline for responses is 3 February 2016.

Whilst OTS did speak to numerous employers and parties across various sectors in compiling their reports, this consultation represents a good opportunity for the education sector to be heard.

Respond to the Consultation

HMRC are encouraging responses to their consultation paper by e-mail to employmentincome.policy@hmrc.gsi.gov.uk. Some schools may be concerned about confidentiality in the replies that they provide and unfortunately, HMRC have indicated that they cannot guarantee confidentiality in view of Freedom of Information Act rules. Hence, we are proposing to co-ordinate replies to the consultation on behalf of a number of schools.

For further information on how the proposed changes to tax treatment of staff accommodation may affect your school or to take part in our response to the consultation, please contact Simon Linnitt in our Independent Schools team on 0117 3145 292.

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