Anyone with knowledge of benefits in kind?

[autumnleavesarecoming]

Wondering if anyone can check a calculation for me please, especially if you have knowledge/experience of Benefits in Kind.

If accommodation is provided by an employer in a house worth about £350,000 (in today’s prices, the employer bought it for far less many many years ago) the calculation going by the HMRC website is:

Annual value = 1985 Rateable Value divided by 2.7.
1975 Rateable value is 425, so the annual value = £157.41.

Then you add an extra charge if the property is worth over £75,000, so you minus £75,000 then multiply that amount by 2.25% interest rate and finally add on the annual value.

£350,000 - 75,000 = 275,000.
275,000 x 2.25% = 6,187.50
6,187.50 + 157.41 = 6,344.91.

The employer couldn’t find the rateable value so went for an inflated market rent instead, and then with the additional charge added on, the benefit is being calculated by them at around £30,000.

There is obviously a massive difference between the two amounts, so can anyone help with which is correct? Thanks.

Sorry I don't know but try the HMRC helpline. They are always great

Your calculation may be correct, but I was paying that kind of amount just for a medium size/cost company car. An actual house feels like it should be a lot more. I think you may need to persuade your employer to choose a more realistic market rent. HMRC isn’t going to do the calculation for them. I agree to ring HMRC for advice but they can be a bit hit & miss. If you don’t get a reasonable answer, ring again on a different day!

PS how much your employer bought the house for is irrelevant - this is about the taxable benefit you are receiving by living in it.

Thanks - I will try HMRC next but I was hoping that somebody had experience with it first just to see.

I know that the value they bought it for isn’t relevant as such, but it can be partly relevant in relation to whether it costs them anything to provide the accommodation, and it doesn’t because they bought it a long time ago.

I won’t go into the complicated scenario, but it was never originally set up as being provided by the employer - they are only linked to the property. It was a local arrangement and we were also providing a service by living there, so the bik announcement came entirely out of the blue.

It seems that it’s a grey area around values, with one way of approaching them producing a very low answer, and the other an over inflated one.