EIM11443 - Living accommodation: Section 105 ITEPA 2003 benefit on property in the United Kingdom: example of taxable period
Section 105 ITEPA 2003
On 1 February 2000 an employer acquired living accommodation for
£65,000 that an employee occupied from that date at a rent of
£300 a year. Although the employee moved out of the
accommodation on 5 December 2003, he continued to work for the
employer. The property was occupied by someone else after 5
December 2003. The gross rating value for the property is
£900. No improvements were made to the property before 6 April
2003.
The calculation of the amount of earnings for 2003/04 is:
| £ | |
| annual value 8/12 x
900
(because he lived in the property for 8 of the 12 months) | 600 |
| less rent paid by employee 8/12 x 300 | 200 |
| chargeable earnings | 400 |
If instead of acquiring the property the employer had rented it for £3,000 a year from 1 February 2000, the amount of earnings for 2003/04 would be:
| £ | |
| rent paid by employer
8/12 x 3000
(because the employee lived in the property for 8 of the 12 months) | 2,000 |
| less rent paid by employee 8/12 x 300 | 200 |
| chargeable earnings | 1,800 |
As the amount of rent paid is more than the property's annual
value, the rent paid by the provider is used in the calculation.
EIM11428 explains the period in which
the benefit arises.
For examples of the Section 105 charge on properties outside
the United Kingdom see example
EIM11421 and example
EIM11422.
