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Accommodation Offets

Accommodation for Employees

 The Accommodation Offset is a figure set by the Government each year.  It is the limit on the amount that can be considered as a value for provision of accommodation by an employer for an employee. 

 The current (2017/18) accommodation rate is £6.40 per day or £44.80 per week.

 What accommodation is included?

In summary, the employer is providing accommodation if any of these apply:

  • the accommodation comes with the job;
  • the employer owns or rents the property the worker lives in; or
  • the employer gets a payment from the worker’s landlord.

 What counts as accommodation?

Accommodation charges include any services provided in connection with the accommodation (e.g. oil, gas, laundry etc.). 

 It doesn’t matter if the cost of the accommodation and/or services is taken from the worker’s wages beforehand or if the worker pays the cost after they get their wages.

 The effect on minimum wage

If the employee is offered accommodation under the terms set out above and the cost of accommodation (including services) is above the accommodation rate i.e. the total cost of accommodation and services per week is more than £44.80 then this has an impact on National Minimum Wage (NMW).  Potentially, an employer has to increase the worker’s hourly rate of pay to comply with legislation.

 Sanctions

Employers should be wary of paying less than the NMW as the HMRC penalty for this can be up to 200% of the underpayment, up to a maximum of £20,000 per employee, and HMRC can publicly name and shame organisations that fail to pay NMW. It is also potentially a criminal offence.

 If you are an employer offering employees accommodation that costs more than £44.80 a week please contact us to undertake the necessary calculations to ensure that you comply with NMW.

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