EIM11427 - Living accommodation: housing for key workers: shared ownership
Shared ownership
For information on the scheme for Key Housing and the Starter
Homes Initiative, see
EIM21735.
A tax liability may arise with shared ownership. If the
employer owns part of the property then there is a benefit. If a
third party such as a RSL owns part of the property and the
property is provided by reason of the employment, then there is a
benefit. (See
EIM11408 for guidance on “by
reason of the employment”.)
The amount of earnings is related to the share in the
property, which the employee does not own.
Example 1: 60% of the property is owned by the key
worker and 40% by a third party e.g. RSL or employer, the share in
the property cost the employer, RSL etc less than £75,000, the
GRV of the property is £1200.
Answer 1: The amount of earnings under S105 is
£480, 40% of the property’s GRV. [See
EIM11431 for the calculation and
EIM11432 which explains why GRV (gross
rating value) is used.]
If the key worker pays rent of £480 or more per year
then the benefit is extinguished.
If the share in the property cost the employer, RSL etc more
than £75,000 the amount of the benefit is calculated in
accordance with S106 ITEPA 2003.
Example 2: the facts are the same as above but the RSL spent £90,000 in buying a 40% interest in the property in May 2004.
Answer 2: (See EIM11480 for information on how to calculate the benefit).
| Cost of accommodation | £90,000 | |
| Less | £75,000 | |
| Additional yearly rent of | £15,000 at 5% = | £750 |
| Plus S105 benefit (GRV)(1200 x 40%) | £480 | £480 |
| Total is | £1230 |
If the worker pays rent of £1230 or more a year then the benefit is extinguished.
