This page gives an example of a case where the construction of
the premises is such that a separate part is clearly designed and
used for business use rather than living accommodation (see
EIM11502). In this example the
non-living accommodation part of the premises commands twice as
much cost or rent per square metre than the living accommodation
part. For an example where the non- living accommodation and living
accommodation parts command the same cost or rent per square metre
see example
EIM11504.
An employer purchased premises for £300,000 in 2001. The
premises consist of a shop with a flat over it. An employee is
allowed to live in the flat paying rent of £1,000 per annum.
There is no exemption due from the provided living accommodation
charge. The gross rating value for the whole premises is
£2,400. The floor space of the shop and the flat are the same.
Evidence is produced that where similar premises in that area have
been sold the shop space has been sold for twice as much per square
metre as the flats above them. You accept that evidence as being
valid for the premises you are considering. The official rate of
interest for 2002/03 was 5%.
The calculation of the amount of earnings for 2002/03 is:
|
£ |
£ |
||
| cost of whole premises |
300,000 | ||
| less part relating to shop |
200,000 |
(£300,000 x 2/3) | |
| part relating to flat |
100,000 | ||
| less |
75,000 | ||
| additional yearly rent |
25,000 |
at 5% = |
1,250 |
| gross rating value |
2,400 | ||
| less part relating to shop |
1,600 |
(£2,400 x 2/3) | |
| gross rating value of flat |
800 | ||
| less rent paid by employee |
800 | ||
| Section 105 benefit |
nil |
nil |
|
|
1,250 |
|||
| less excess rent (£1,000 less £800) |
200 |
||
| chargeable earnings |
1,050 |
