HMRC has announced (by way of an update to the Employment Income Manual) that the concession exempting representative occupier posts from the benefit in kind charge on their employer provided living accommodation will be withdrawn from 6 April 2021.

Following a decision in the Court of Appeal (Wilkinson), HMRC undertook to review the position of all published extra statutory concessions and those not published as extra statutory concessions but identified as such. It was decided that extra statutory concessions on representative occupiers do not meet the conditions set out for the collection and management of taxes and should either be legislated for or withdrawn. The Government decided to not legislate to permit this extra statutory concession and so it will instead be withdrawn.

However, it is important to note that the following two tests for the employer provided living accommodation exemption still apply:

• That it is necessary for the proper performance of the employee’s duties that they should reside in the accommodation.
• That 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.

Living accommodation exemption: meaning of representative occupier

The current tax treatment of individuals provided with living accommodation by their employers or by reason of their employment as “representative occupiers” has been identified as an extra statutory concession. The concession for representative occupiers relates to posts which existed before 6 April 1977.

Former representative occupier posts can qualify for exemption under an extra statutory concession from any benefit arising under Part 3 Chapter 5 ITEPA 2003 on provided living accommodation. A representative occupier is an employee:

• Who resides in a house provided rent free by the employer
• Who as a term of the contract of employment is required to reside in that particular house and is not allowed to reside anywhere else
• Whose occupation of the house is for the purpose of the employer, the nature of the employment being such that the employee is reasonably required to reside in it for the better and more effectual performance of the duties.