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Residential Management Team
Currently the majority of farmworker accommodation is exempt from tax. However, this could be changed under draft legislation that is due to be debated under the Government crackdown on work expenses and benefits. Farmworker accommodation has been highlighted as a key issue.
It is anticipated that the Government could try to get changes to the legislation through before the next general election.
If the changes are implemented, farmworker accommodation moving forwards would need to be justified to the Inland Revenue as falling under an exemption, e.g. the employee can’t do their work properly without it. Those workers who occupy farmworker accommodation in respect of an arable enterprise may struggle to argue the exemption over a farmworker who is on a livestock holding.
Accommodation provided for a son or daughter, if they work for a business, is exempt.
If the accommodation that an employer provides isn’t exempt, it must be reported to HMRC. The employer may then need to deduct and pay tax and NI on the accommodation along with any related costs e.g. Council Tax.
Currently employees who earn less than £8,500 a year do not need to pay tax in relation to worker accommodation. The Government are also looking at removing this exemption.
It is therefore prudent to seek professional advice on this matter in anticipation of the changes being implemented.
Current guidance on expenses and benefits in relation to accommodation can be found on the GOV.UK website by following the link below:
Lucinda Riddell, Associate Director
Tel: 01748 829210