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Income Tax (Earnings and Pensions) Act 2003

Section 106: Cash equivalent: cost of accommodation over £75,000

390.This section sets out how to calculate the cash equivalent of the benefit of provided living accommodation costing more than £75,000 by means of a method statement as set out in subsection (2). It derives from section 146(1) to (5) and (11) of ICTA.

391.Step 1 calculates the basic charge under section 105 of this Act. This includes taking into account any sums made good by the employee, as provided for in section 105(5).

392.Step 2 calculates the additional yearly rent of the accommodation based on the extent to which the cost of providing the property exceeds £75,000.

393.Step 3 reduces the additional yearly rent to that for “the taxable period”.

394.Step 4 brings together the results of Steps 1 and 3 and also allows any excess of rent paid to be brought into account.

395.Subsection (3) defines excess rent and sets out the circumstances in which it can be taken into account at Step 4.

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