Free or Subsidised Accommodation

• Employer-owned accommodation
• Employee required to live on premises
• Rented accommodation
• Accommodation costs paid as part of a relocation package
• Provision of accommodation plus meals at a temporary work location

Employer-owned accommodation

Where accommodation is owned and provided by the employer for use by an employee, the value of the taxable benefit to the employee is the aggregate of -

• any expense (other than the cost of acquisition - see Associated costs) incurred by the employer in connection with the provision of the accommodation, and
• the annual value of its use.

The annual value of the use of employer-owned accommodation is the annual rent which the employer might reasonably expect to obtain for the property if the property were rented on an arm's length basis and on the basis that the landlord be responsible for all repairs, insurance etc. and the tenant undertook to pay all the usual tenant's expenses.

As a general rule of thumb for calculating the market rent (the annual rent which the employer might reasonably expect to obtain) the employer may take a figure equal to 8% of the current market value of the property (but see also following paragraph).

However, where a vouched lower figure is available, e.g. an auctioneer's estimate of the rent likely to be obtained, this figure may be used for the purposes of calculating the PAYE and PRSI due on the taxable benefit. (The auctioneer's estimate should be retained for inspection by Revenue if required see – Records to be kept).

The annual value of employer-owned accommodation should be determined when the accommodation is first provided to an employee and then reviewed annually for as long as the property is available to employees.

The annual value as determined should be reduced by any amount which the employee is required to make good and actually makes good directly to the employer in respect of the accommodation.

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Employee required to live on premises

A taxable benefit will not arise where an employee (but not a director) is required by the terms of his or her employment to live in accommodation provided by the employer in part of the employer's business premises so that the employee can properly perform his or her duties ('better performance test'), and either -

• the accommodation is provided in accordance with a practice which, since before 30 July 1948, has commonly prevailed in trades of the class in question as respects employees of the class in question, or
• it is necessary, in the particular class of trade, for employees of the class in question to live on the premises.

It is accepted that the 'better performance test' is met in practice where -

• the employee is required to be on call outside normal hours, and
• the employee is in fact frequently called out, and
• the accommodation is provided so that the employee may have quick access to the place of employment.

Examples of such employees include:

• managers or night care staff in residential or respite centres (where such centres are not nursing facilities)
• governors and chaplains in prisons
• caretakers living on the premises (where they are in a genuine full-time caretaking job)

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Rented accommodation

Where accommodation is rented, at a market rent, by an employer for an employee, the taxable benefit for PAYE and PRSI purposes is the actual amount of rent paid less any amount which the employee is required to make good and actually makes good to the employer in respect of the accommodation.

Associated costs

Where the employer meets any of the costs associated with the provision of living accommodation, e.g. cost of light or heat, a taxable benefit will arise on the amount met by the employer and not made good by the employee.

Furniture

Where furniture (which remains in the employer's ownership) is provided the rules for the Free use of Assets set out in first paragraph of: Free Use of Assets (other than accommodation, company cars or vans)

Accommodation costs paid as part of a relocation package

Accommodation costs paid as part of a relocation package, which is in accordance with the provisions of Revenue instructions, are not subject to PAYE and PRSI. A copy of these instructions (as published in Statement of Practice SP IT/1/91 and as updated in Tax Briefing issue 31) is included at: Removal/Relocation of Expenses (PDF, 264KB) - (Extract from Tax Briefing - Issue 31, page 11).

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Provision of accommodation plus meals at a temporary work location

In some instances, as an alternative to paying subsistence or country money that would, under the terms outlined in Statement of Practice SP – IT/2/07 qualify as being tax free, employers provide accommodation and meals at the temporary location where their employee's are working. Where this occurs, the Revenue Commissioners are prepared to accept that a taxable benefit will not be treated as arising in the hands of the employee where the following conditions are satisfied:

• the accommodation provided is not the principal private residence of the employee (i.e. he/she maintains separate accommodation where he/she normally resides); and
• if the accommodation is rented by the employer, the rent paid represents the reasonable cost of accommodation for the location; and
• the reimbursement as regards meals represents no more than a reasonable reimbursement of the actual cost.

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