Mr. Alan WilliamsTo ask the Chancellor of the Exchequer whether the amount of the deduction or the market rental value of the accommodation is used to calculate the tax due when assessing the value for tax purposes of accommodation provided as part of salary.
§ Mr. Dorrell[holding answer 29 March 1994]: Employees who choose to spend part of the wages to which they are entitled on accommodation from their employer remain taxable on their full wages.
Employees who have living accommodation provided by reason of their employment are liable to tax on the value of the accommodation, subject to certain statutory exemptions. The value of the accommodation for tax purposes is the annual value of the property or the rent paid for it if that is greater. Annual value is defined in the same way as the annual value which was formerly used for rating purposes and the figures taken for income tax purposes is usually the same as the gross value last used for rating purposes. There is an additional charge for certain properties which cost more than £75,000.
The basis of valuation of living accommodation provided by reason of an employment is currently being reviewed to find a practical replacement for figures from rating lists.