Chapter PTM133930
| Published date | 27 March 2015 |
| Record Number | PTM133930 |
| Glossary | PTM000001 |
Living accommodation
Living Accommodation - meaning of ‘provided for private use’
Living accommodation held by an investment regulated pension scheme would be taxable property and subject to an unauthorised payments charge (see PTM134100). The following rules do not apply in the case of taxable property held by an investment-regulated pension scheme.
Where accommodation, other than work accommodation (see PTM133940), is provided for use by a person who is, or has been, a member (or someone within the person’s family or household) the cash equivalent of the benefit to the person who is, or has been, a member is taxable as an unauthorised payment. Examples of living accommodation are houses, flats, houseboats, holiday villas and apartments. Living accommodation is accommodation that allows the person to live independently, for example with a bathroom, kitchen, food storage areas as well as a bedroom etc.
The value of the benefit is the difference between
- the annual value of the accommodation for the taxable period, and
- any sums made good by the member to the scheme.
For all UK and overseas properties held by registered pension schemes, the annual value for this purpose is the amount of rent that would be payable if the property had been let on the open market under the terms of a commercial lease, in accordance with section 110 Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) (and section 106 ITEPA 2003 for properties over £75,000) and not the gross rating value applied to UK properties.
Employees receiving a benefit in kind from the use of UK residential property provided by their employer have the annual value calculated using the property’s gross rateable value. This is a continuation of treatment that has been applied since the repeal of the General Rate Act 1967. The unauthorised payment charge on scheme members is new legislation and therefore there is no need to apply such a continuation of treatment. The annual value of a UK property will therefore be calculated on the value of rent that would be payable under a commercial lease.
Example
JJ Ltd Registered Pension Scheme (which is not an investment-regulated pension scheme) buys a residential property for £200,000 and allows the member James to live in it for an annual rent of £800 per month. The open market rental value of the property is £1,000 per month. The official rate of interest for the year is 5%.
The amount of the...
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