Is temporary corporate housing taxable?
If you have to travel for business and stay in another location then it’s possible you – or your employer – may be able to deduct tax for the cost of your accommodation.
That’s because your living expenses (i.e. cost of the room or apartment) will be regarded as corporate housing, in other words, a residence used for business purposes.
The tax office defines such short-term accommodation as hotels and serviced apartments etc which are out with the area where you normally work. In other words, if you work in Glasgow and have to attend week-long meetings and a conference in London every few months then it makes sense (financially and physically) to book accommodation in the Capital rather than fly back to Glasgow every night.
What you can claim back for
How much it’s possible to deduct depends on several circumstances. The accommodation should, for instance, cost no more than an equivalent hotel would, and it should only be used for business purposes i.e. not private. In such cases, you or your employer would be entitled to claim back the cost of renting and running the apartment.
If you also use the apartment for private use ie for family weekends away etc then you will have to declare this as it will restrict the amount of tax allowance you can claim back. You do this by filling in form P11D on an annual basis.
If, in the case of a parliamentary politician who may live in Newcastle but have a flat in London (described as a pied-à-terre) the employee wouldn’t be entitled to any tax reduction. This is also the case if the London flat is used as their second home.
@freeagent says: The main issue with travel and accommodation is to make sure you’re certain that the only costs you’re including in your accounts are for business.
HMRC and longer-term living accommodation
HMRC state that if an employer provides living accommodation for you then you are eligible for tax. However, there are exemptions to this rule, such as:
- If you must stay there in order to do your job properly.
- You’ll do your job better if you stay there and anyway, it’s customary for accommodation to be provided (ie a live-in concierge).
- Extra security is provided so you need to be located there for your safety (eg military police).
It’s worth noting too that when you are exempt from tax for your living accommodation, you don’t have to pay Council Tax, water charges or rates either (your employer has to reimburse you for these).
However, the first two exemptions listed above don’t apply if, as the employee, you are also the director of the company or an associated company. They would apply if you had no ‘material interest’ in the company, was a full-time working director or the company is non-profit making or has charitable status.
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