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Posted Fri, 26 Aug 2022 10:39:03 GMT by Neil Ferris
If an employer provides free accommodation to a minimum wage employee, the employee's pay rate can be reduced by the Accommodation Offset to a Total of £8.70 x 7 days = £60.90 per week. For an employee aged over 23, who works 43 hours per week, this means that their Pay Rate can be reduced as follows: £9.50 x 43 = £408.50 - £60.90 = £347.60 / 43 = £8.09 and still maintain earnings equivalent to the National Living Wage. Would the employee's Weekly Tax Liability be based on 43 x £8.09 = £347.87? Or would it be based on £347.87 + £60.90 (Accommodation Offset)? If it is the latter, how would this be reflected on the employee's payslip or would a P11d need to be submitted at the end of Tax Year for each affected employee?
Posted Tue, 30 Aug 2022 16:25:47 GMT by HMRC Admin 10
The accommodation offset is for NMW purposes only and does not affect the gross pay for tax and NIC as the figure of pay has not changed – the employer is only using this offset amount to inflate the figure to meet his NMW obligations – you are not actually paying the employee this higher figure so we cannot tax/NIC it.
If you are actually going to charge the employee for the accommodation, then this charge would come off the net pay unless the employee had a salary sacrifice agreement in place.
Posted Wed, 28 Sep 2022 08:18:25 GMT by Neil Ferris
Sorry but this appears to contradict itself. You are saying that the Offset does not affect the Gross Pay for Tax and NIC which, as we have to pay at least the minimum wage, would appear to say that their Gross Pay would still be £9.50 per hour but then you say that we cannot tax it. Could you just confirm. In the above example, the employee's Payslip should show a Pay Rate of £8.09 and nothing else and that Tax and NI calculations would be based on 43 x £8.09 = £347.87 Gross Pay, which nothing further to report, either by us or the employee, regarding the accommodation provided. Thanks for your help.
Posted Fri, 14 Oct 2022 11:38:30 GMT by HMRC Admin 19

Where the employer provides accommodation for free, the accommodation offset is a notional figure used for the purposes of calculating NMW pay only.

For tax and National Insurance contributions purposes, the figure on the payslip should be the actual gross pay paid to the worker. 

Thank you.

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