Section 315 | Limited exemption for expenses connected with certain living accommodation

From legislation.gov.uk

15 July 2026

(1)This section applies if—

(a)living accommodation is provided for an employee in a tax year, and

(b)conditions A and B are met.

(2)Condition A is that the accommodation falls within the exception in one of the following provisions—

(3)Condition B is that there is an amount of earnings from the employment in the tax year by virtue of expenditure, or the reimbursement to the employee of expenditure, on—

(a)heating, lighting or cleaning the premises,

(b)repairs to the premises, their maintenance or decoration, or

(c)the provision in the premises of furniture, equipment or other items which are normal for domestic occupation.

(4)If this section applies, no liability to income tax arises in respect of the earnings mentioned in subsection (3) to the extent that they exceed—

Formula

(10 % \times NE \times \frac{DA}{DE}) - SMG

where—

DA is the number of reckonable days in the tax year (a “reckonable day” being a day on which—

(a) the accommodation is provided, and

(b) the employment is held by the employee),

DE is—

(a) the number of days in that year, or

(b) if the employment is held for only part of that year, the number of days in that part,

NE is the net amount of the earnings from the employment in the tax year (see subsection (5)),

SMG is, where the expenses are incurred by a person other than the employee, so much of any sum made good by the employee to that other person as is properly attributable to the expenses.

(5)To calculate the net amount of the earnings from the employment—Step 1Take the earnings from the employment, leaving out of account the expenses in question.Step 2Add, in the case of employment by a company, the earnings from any employment by an associated company.A company is “associated” with another for this purpose if one has control of the other or both are under the control of the same person.Step 3Deduct any deductions allowable under—

(a)section 232 (giving effect to mileage allowance relief) or Part 5 of this Act,

(b)sections 188 to 194 of FA 2004 (contributions to registered pension schemes), or^F1

(c)section 262 of CAA 2001 (capital allowances to be given effect by treating them as deductions from earnings).