There are special rules for the provision of living accommodation for employees. In most cases, employees will pay tax on any living accommodation provided by an employer unless they qualify for an exception.

However, where an employee qualifies for an exemption, there is no tax to pay on the provision of living accommodation. The definition of living accommodation includes houses, flats, houseboats, holiday homes and apartments. It does not include hotel rooms or board and lodgings.

An exception for living accommodation will usually apply in the following cases:

• If it is domestic or personal
  • Accommodation is exempt if both:
    • you are an employer who is an individual, for example a sole trader; and
    • you are providing it for someone because they are a close relative – even if they happen to work in your business.
• If it is provided by a local council
  • Accommodation is exempt if a local council provides it on the same terms that it provides housing to non-employees.
• If it is necessary or usually provided for the job
• If it is needed for security

Other charges and costs

If the accommodation you provide is exempt, you do not have to report Council Tax, water and sewerage charges to HMRC, or pay National Insurance and tax.

If you are having trouble paying your tax on time you may be eligible to receive support from HMRC by applying for an instalment payment plan. An online payment plan for Self-assessment tax bills can be used to set up arrangements for paying tax liabilities of up to £30,000.

The large majority of taxpayers, who are due to make payments on 31 January 2024, could qualify to implement a Time to Pay arrangement online.

Taxpayers that want to use the online option must have filed their latest tax return within 60 days of the payment deadline and intend to pay their debt within the following 12 months or less. Taxpayers that qualify for a Time to Pay arrangement using the self-serve Time to Pay facility online, can do so without speaking to an HMRC adviser.

Taxpayers with Self-assessment tax payments that do not meet the above requirements need to contact HMRC to formally request a Time To Pay arrangement. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.

HMRC will only offer taxpayers the option of extra time to pay if they think they genuinely cannot pay in full but will be able to pay in the future. If HMRC do not think that more time will help, they can require immediate payment of a tax bill and start enforcement action if no payment is forthcoming.

HMRC’s free tax app is available to download from the App Store for iOS and from the Google Play Store for Android. The latest version of the app includes some updated functionality to update your name, save your National Insurance number to your digital wallet and to obtain help from HMRC's digital assistant.

The APP can be used to see:

• your tax code and National Insurance number
• your income and benefits
• your income from work in the previous 5 years
• how much you will receive in tax credits and when they will be paid
• your Unique Taxpayer Reference (UTR) self-assessment
• how much self-assessment tax you owe
• your Child Benefit
• your State Pension

The app can also be used to complete a number of tasks that usually require the user to be logged on to a computer. This includes:

• get an estimate of the tax you need to pay;
• make a self-assessment payment;
• set a reminder to make a self-assessment payment;
• report tax credits changes and complete your renewal;
• access your Help to Save account;
• using HMRC’s tax calculator to work out your take home pay after Income Tax and National Insurance deductions;
• track forms and letters you have sent to HMRC;
• claim a refund if you have paid too much tax;
• update your name and / or postal address;
• save your National Insurance number to your digital wallet; and
• choose to be contacted by HMRC electronically, instead of by letter.

HM Revenue & Customs (HMRC have one clear objective, to recover past government expenditure and then recycle the cash collected to repay government borrowing and release funds for future expenditure.

To do this, HMRC are obliged to assess taxes by adopting the current legislation to collect taxes from individuals and businesses.

Fundamentally, HMRC base their judgement of the tax you owe on the data they have collected via tax returns, and all of these numbers relate to events in history. Whilst they will endeavour to allow the reliefs and allowances to which you are entitled, they do not have the data or the staff to call you up and ask about your future plans and how you can best organise your affairs to minimise overall tax liability.

For example, you may be a self-employed builder about to buy a replacement van in the last month of your accounting year. The cost of £20,000 could potentially be written off against your profits for the year and save you £4,000 in basic rate tax. But you know that in the following year you will be building a house that should net you profits in excess of £50,000. That being the case, it would make sense to defer the new van purchase until the following month, the first month of the new accounting period. Then, the £20,000 investment would save up to £8,000 in higher rate tax.

As we face the new calendar year there are just three months to the end of the 2023-24 tax year.

Which is why we are keen to have a conversation with all our clients to ensure your tax affairs are manged in the most efficient way; based not only on what has already happened, but more importantly, on what is planned to happen in the 2024-25 tax year.

In this way we can help you keep your tax footprint to a minimum.

Please call so we can determine how you would be best advised to organise your finances to minimise tax liabilities. The clock is ticking.