Withdrawal of 'representative occupier' ESC

The exemption from benefit in kind charges for ‘representative occupier’ posts is being withdrawn with effect from April 2021.

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David Yewdall, John Manis
Published: 12 May 2020 Updated: 13 Apr 2023

Employer-provided living accommodation: removal of concession for ‘Representative Occupiers’

Keys House 227591032

Withdrawal of concession

The exemption from benefit in kind charges for ‘representative occupier’ posts is being withdrawn with effect from April 2021.

Typically, the provision of living accommodation to an employee is a taxable benefit in kind, unless an exemption applies. Benefits in kind are generally subject to income tax and Class 1A NICs, with associated reporting obligations.

Until April 2021, former representative occupier posts can qualify for exemption from these liabilities under an extra statutory concession (ESC). However, following a review of all ESCs, HM Revenue & Customs (HMRC) recently announced that from April 2021, the representative occupier concession will be removed.

The concession has been available only for posts that existed before 6 April 1977, where:

  • an employee resides in living accommodation provided rent-free by the employer;
  • the employee is required to reside in that particular living accommodation under the terms of the employment contract and is not allowed to reside elsewhere; and
  • the nature of the employment is such that the employee is reasonably required to reside in the living accommodation provided by the employer for the better and more effective performance of their duties.

If the above conditions are met, there will be no taxable benefit in kind until April 2021.

Employer considerations and next steps

Employers will need to undertake a review to consider whether or not they have been relying on the ESC. Use of the ESC is common in certain industries, such as the higher and further education sectors. In these sectors, it may be clear that the exemption has been relied upon. Organisations may, however, be unaware that they have been relying on the ESC, given that the affected employees are performing roles that have existed in the organisation for a very long time.

Where the ESC has been relied on historically, it will be necessary to consider future tax and reporting requirements.

If no other exemption is available, a taxable benefit in kind will arise and the benefit will need to be reported on the employee’s form P11D and made subject to employment income tax and Class 1A NIC. The calculation of the accommodation benefit will depend on a variety of factors, including whether or not the property is owned or rented by the employer and whether it cost more or less than £75,000.

Available statutory exemptions

In some cases, living accommodation might be still exempt from income tax and Class 1A NIC, as it may be covered by another statutory exemption.

Following the removal of the ESC, exemptions remain available in respect of living accommodation where any of the following applies:

  • the provision of the living accommodation is necessary for the proper performance of their employment duties. This may include, for example, full-time caretakers, agricultural workers, and wardens of sheltered housing schemes;
  • the provision of the living accommodation is both customary and for the better performance of the work duties. This may include police officers, prison governors, and managers of traditional off-licence shops; and
  • there is a special threat to the employee’s security and special security arrangements are in force.

We can assist in a review of the current arrangements to identify any areas of risk, advise on any other available exemptions, and calculate any taxable benefit in kind that may arise due to the upcoming change.

If you would like more information, or require assistance, please speak to your usual Smith & Williamson contact or a member of our Employer Solutions team.

Ref: NTAJ14052063

By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.


This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.