Income Tax (Earnings and Pensions) Act 2003

Accommodation costing £75,000 or less

105 Cash equivalent: cost of accommodation not over £75,000

(1) The cash equivalent is to be calculated under this section if the cost of providing the living accommodation does not exceed £75,000.

(2) The cash equivalent is the difference between—

(a) the rental value of the accommodation for the taxable period, and

(b) any sum made good by the employee to the person at whose cost the accommodation is provided that is properly attributable to its provision.

(3) The “rental value of the accommodation” for the taxable period is the rent which would have been payable for that period if the property had been let to the employee at an annual rent equal to the annual value.

(4) But if the person at whose cost the accommodation is provided pays rent for the whole or part of the taxable period at an annual rate greater than the annual value—

(a) subsection (3) does not apply to that period or (as the case may be) that part of it; and

(b) instead the “rental value of the accommodation” for that period or part is the rent payable for it by that person.

(5) If the rental value of the accommodation for the taxable period does not exceed any sum made good by the employee as mentioned in subsection (2)(b), the cash equivalent is nil.