23 January 2019 
Caroline Jones, Employment tax director
For many years universities providing accommodation to staff, have been relying on a tax exemption, which applies when the accommodation is provided for the better performance of the duties and the employment is one of the types where it is customary for employers to provide accommodation to employees. HMRC’s December Employer Bulletin reminds employers that, when considering whether the customary test is met, it is not, whether it is customary for your institution to provide the accommodation but rather whether it is the norm in the Sector for a class of employee to be provided with accommodation.
Following the publication of the bulletin we understand that HMRC is considering making an announcement pre-April, which will make clear its view that it is no longer customary for accommodation to be provided to Vice-Chancellors. This could mean that from April 2019 universities will be unable to rely on the customary and better performance criteria to treat accommodation as tax-free.
If HMRC does make the expected announcement that it will not accept the provision of accommodation is customary then it may be possible for some universities to rely on the representative occupier exemption. This exemption was given when the current legislation was enacted in 1977. Those who were defined as representative occupiers prior to April 1977 would continue to receive accommodation tax-free provided that the circumstances were un-changed and the following conditions are met:
This exemption may apply to Vice-Chancellors who succeed to the post where it was first regarded as carrying representative status, provided that the circumstances surrounding the provision of the accommodation hadn’t changed and that the required conditions were met. You may wish to take the opportunity to consider whether your institution will be affected by the potential changes post April.
