Income Tax (Earnings and Pensions) Act 2003 section 105

Cash equivalent: cost of accommodation not over £75,000

Section 105 explains how to calculate the taxable cash equivalent of employer-provided living accommodation where the cost of providing that accommodation does not exceed £75,000.

• Where accommodation costs £75,000 or less, the cash equivalent is the rental value for the taxable period minus any amount the employee reimburses to the provider by 6 July after the end of the tax year; if a modified cash equivalent applies, it simply equals the rental value with no deduction for reimbursements.
• The rental value is normally based on the annual value of the property, but where the accommodation provider pays rent (including any spread lease premium) at a rate exceeding the annual value, the actual amount the provider pays is used instead.
• The rental amount payable by the provider includes both periodic rent and any amount attributed to the period in respect of a lease premium, as determined under sections 105A and 105B.
• If the employee's reimbursement equals or exceeds the rental value, the cash equivalent is nil and no tax charge arises on the accommodation benefit.