For information on the scheme for Key Housing and the Starter
Homes Initiative, see
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|
|Additional yearly rent of||£15,000 at 5% =||£750|
|Plus S105 benefit (GRV)(1200 x 40%)||£480||£480|
If the worker pays rent of £1230 or more a year then the benefit is extinguished.