Income Tax (Earnings and Pensions) Act 2003 section 314

Council tax etc. paid for certain living accommodation

Section 314 exempts from income tax any payments or reimbursements an employer makes towards council tax, rates, or water and sewerage charges for accommodation that qualifies under specific duty-related or security-related exceptions.

• The exemption applies only where the accommodation falls within one of three recognised exceptions: necessary for performing duties, provided for better performance of duties, or provided due to a security threat.
• No income tax charge arises on any payment made to, for, or on behalf of the employee covering council tax, rates, or water and sewerage charges for that accommodation.
• The exemption equally covers direct payments by the employer and reimbursements of amounts the employee has already paid.
• The scope of covered charges uses updated terminology — council tax, rates, water charges, and sewerage charges — reflecting modern domestic property obligations.