Income Tax (Earnings and Pensions) Act 2003 section 106

Cash equivalent: cost of accommodation over £75,000

Section 106 sets out how to calculate the taxable benefit of employer-provided living accommodation where the cost of providing that accommodation exceeds £75,000, imposing an additional charge based on the official rate of interest applied to the excess over that threshold.

• Where the cost of providing living accommodation exceeds £75,000, an additional charge applies on top of the basic charge calculated under section 105
• The additional yearly rent is calculated by multiplying the official rate of interest (as at 6 April in the tax year) by the amount by which the cost exceeds £75,000
• The additional yearly rent is then time-apportioned to the taxable period and added to the basic charge from section 105 to give the total cash equivalent
• Any rent the employee pays above the rental value of the accommodation can be deducted from the total, provided it is paid to the accommodation provider by 6 July following the end of the tax year