The measure
The chancellor has closed a long standing technique which allowed employees and employers to minimise the tax and national insurance payable on the provision of accommodation by the employer through the payment of a lease premium and a lower rent.
The legislation is designed to ensure that where a lease premium is paid for a lease of 10 years or less, the lease premium will be treated for tax purposes as if it was payment of rent. The taxable amount in any tax year will be treated as the amount of the lease premium spread over the duration of the lease plus the amount of any rent paid by the person at whose cost the accommodation is provided less any amount made good by the employee.
Who will be affected?
Employees living in rented accommodation paid for by their employers.
When?
The changes will apply to new leases and those extended after 22 April 2009.
Our view
This change was expected given that this has been an area of interest from HMRC for a number of years. The change will significantly increase the cost of accommodation for expatriate employers who use these techniques in the future.
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