HMRC has published a consolidated version of How to tax living accommodation given to employees. The contents are as follows:

• Basis of liability
• Exemption: No tax charges for the provision of living accommodation will arise where:
  • (a) It’s necessary for the proper performance of the employee’s duties that they should reside in the accommodation.
  • (b) The accommodation is provided for the better performance of the employee’s duties and the employment is one of the kinds for which it’s customary for employers to provide accommodation for the employee.
  • (c) There’s 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.
  • Section 314: Where exemption is due in any of the above circumstances it also extends to any tax charge that might arise for Council Tax, water charges or rates reimbursed to, or paid on behalf of, the employee concerned.

• Provision of living accommodation ‘by reason of employment’
• The cost of providing living accommodation
• Substitution of market value for cost
• Calculation of cash equivalent: accommodation costs £75,000 or less
• Calculation of cash equivalent: accommodation costs £75,000 or less: lease premiums
• Calculation of cash equivalent: accommodation costs over £75,000
• Annual value equal to open market rental value of the accommodation
• Accommodation provided to more than one employee
• Provision of benefits or facilities connected with living accommodation
• Deduction for business expenses
• Optional remuneration arrangements.