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My company provides me with living accomodation (under my UK…

My company provides me with...
My company provides me with living accomodation (under my UK secondment as an expat in the UK). I will use this property as a weekends house as I live in Central London and have bought a house there. I have declared my house to HMRC as my principal property as I would like to have this asset registered for full capital gains relief. The question is: a) is this a problem either for me or for my company regarding the living accomodation benefit?
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Answered in 45 minutes by:
7/8/2012
Sam
Sam, Accountant
Category: UK Tax
Satisfied Customers: 14,246
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
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Hi

 

Thanks for your question

 

Whether this creates a problem (and a taxable benefit) is dependent on many factors.

 

The fact you have purchased accommodation suggests this is not a temporary secondment, as you are also living in this purchased property, so you have declared an intention to make your time in the UK more permanent.

 

Another factor will be how far is the work provided accommodation from this purchased property.

You advise that you live in central London, where the property has been purchased, but where do you work from?

 

Please also advise how long this secondment to the UK is for.


Thanks


Sam

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Customer reply replied 5 years ago
I have been in the UK for the last 12 years. The secondment keeps getting renewed for periods of 2 to 3 years each time. Yes there is a clear intention to make my time more permanent in the UK as I have purchased this property and have declared it as my principal residence. the accomodation provided by my employer will be in the countryside whereas my house is in central london, where I work as well. So i work from london.

Hi

 

Thanks for your response

 

Then the living accommodation has been liable to tax for some time, as you are not deeemd to be a temporary secondment (as it exceeds more than 24 months) UNLESS the accommodation is a necessity in the line of your duties (such as boarding school, lighthouse keeper etc where you have to be on site to perform your duties)

 

So this position may need reviewing for the last 10 years

 

Thanks


Sam

 

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Customer reply replied 5 years ago
Yes I am sure my company has been paying tax on my behalf for the accomodation I have been provided. They suggested (back 5 years ago) on my tax return the following (which was written to HRMC): quote 'living accomodation ha been provided to me by employer under under UK secondment agreement. Understanding arrangements with my company's employee benefit trust, my employer has taken a premium sub-lease of property rented by the trust and made the property available to me under license. My employers' capital expenditure on the lease was less than £75000. The taxable benefit, which is included in the P60 figure, therefore represents the annual value of the property under S105 ITEPA, determined in this case as the historic gross ratable value (GRV). This is in accordance with paragraph 11432 in the Revenue's employment income manual. In view of the difficuly, and cost, in obtaining the actual GRV, the latter has been estimated as 5% of the premium. This is a best estimate which is believed to be significantly in excess of the actual gross rateable value.' unquote.
My property was only bought a few years later and as such I have declared it as my principal residency (back in 2009). So the question still stands: a) will my company be liable for any extra taxes? b) do i have a conflict between this benefit provided and my principal residency for the purposes of tax?

HI

 

Thanks for your response

 

1) No - if you are in fact paying tax on the provision of this accommodation, (as your employer would then be suffering Class 1 A also) but if you have claimed that its provided under the UK secondment agreement, then I fear you have not been charged tax, and it may well be that your employer is also then not suffering Class1A - so you need to speak with them about this. As you could be in breach of this secondment provision due to the time you have remained in the UK

But that aside no further taxation will arise on the employer due to you having bought your own residence.

 

2) No - there is no conflict between you have a main residence (with the purchased property) and the accommodation provided, this has no bearing on the issue at all

 

Thanks

 

Sam

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