Some parishes may have housing that they would like to utilise as part of a whole package to encourage a more diverse range of applicants. The housing may be offered as a house for duty, or for the better performance of a role that requires the individual to live on site. In these cases they must meet certain tests to ensure that they are not subject to additional BIK taxation.

Better Performance Test

HMRC provides guidance on how certain exemption may apply for housing offered as part of a remuneration package:

EIM11349 – Living accommodation exemption: the better performance test – HMRC internal manual

This is from Section 99(2) ITEPA 2003 and is an objective test that proves that employee can genuinely perform their duties better by occupying the accommodation provided, as opposed to living elsewhere. It is not simply satisfied by location but also by the nature of the duties that are to be performed there.

In order for the accommodation to *not* be considered a benefit in kind, both the better performance test and the customary test (above and EIM11347 – Living accommodation exemption: the customary test) must apply.

If neither of the above tests apply, it is likely that the housing will be subject to BIK tax. Speak with your Area Finance Advisor for more details on how this should be processed through your payroll and reported to HMRC and the individual (through a P11D).

A calculator for discerning the monetary impact of the BIK can be found here.