Taxing Subsidised Accommodation

[faitaccompli]

I wonder if anyone can assist in giving us a rough idea here.

My cousin is working for a company and earns around £50k pa. The company is offering her assistance with rent instead of a pay increase. The apartment they are offering her is currently being rented out at £1600 a month. It is owned by one of the company directors.

The plan is that she pays £800 a month out of her salary for the rent, and the company pays the company director £800 a month to make up the salary.

The question is, how much tax should she be paying on the subsidy of £800 a month? I said that it would be around 40% plus NI contributions. She said that she won't be paying any tax. The flat is work around £350k.

SO in effect, she will be paying around £1200 a month for a flat worth £1600 a month. The problem here is that if this is the case, this is more than she is paying for her current accommodation, and therefore no point in her moving!

If anyone can give me some outline advice to pass onto her, that would be fantastic. We have both googled and come up with completely different answers!

The answer lies here: www.hmrc.gov.uk/payerti/exb/a-z/l/accommodation.htm#2
And this calculation help sheet may also help: www.gov.uk/government/uploads/system/uploads/attachment_data/file/323572/hs202.pdf

I'm assuming none of the exemptions in the first link apply.

The fact that the property is owned by the director is a red herring. The employer is still subsidising her living accommodation so the calculation is as normal. The higher of rent or the calculated benefit value, less contributions made is a benefit in kind, which is taxed to income tax on a P11d at the year end. The employer will pay class 1a.