Employer-provided living accommodation: changes to tax treatment.

Mike Bracegirdle, who heads the Butcher & Barlow Agriculture Department, examines HMRC’s recent announcement in relation to the forthcoming changes to the taxation of farmworkers  and estate employees dwellings and how they will impact upon farmers and landowners who have employees who are provided with living accommodation.

Current Position

The provision of living accommodation to employees is, in most cases, a taxable benefit in kind. However, for farmworkers there has been a long standing Extra Statutory Concession (ESC) -Representative Occupiers Concession – which has ensured that farmworkers living accommodation was, subject to fulfilling certain conditions, generally exempt from tax.


HMRC have advised that the ESC will be removed as from 6 April 2021. In principle this may mean that there will be unexpected tax charges and National Insurance Costs. It is important for farmers and landowners to be prepared and review the position for both current and retired workers.

Agricultural Workers Living on the Farm

There are some Statutory Exemptions available.  There will remain an exception for living accommodation where it is provided for the proper performance of the employees duties.  HMRC have accepted the agricultural workers who live on farms or agricultural estates would usually satisfy the criteria for this exemption.  It is therefore all important that the farmworkers employment contract reflects that they must live in the accommodation to provide those duties.

Retired Agricultural Workers and their Widows

Again this may remain exempt, if certain conditions are met:

  1. There can have been no improvements to the property carried out within the last five years which would increase its value by 20% or more;
  2. The employee must have occupied the property for at least five years prior to retirement; and
  3. For the five year period the individual was not liable for tax on the accommodation as an agricultural worker.


Historically the non-statutory ESC only applied in respect of employees who were provided with living accommodation and treated as representative occupiers on 5 April 1977 and this circumstances must have remembers unchanged since that date.  In cases where farmers and landowners have since diversified, cases will have to be put forward to HMRC on an individual basis and each case determined upon merit

How can Butcher & Barlow assist

Our Agriculture team works closely with our Commercial and Employment teams at our Gadbrook Park Office.  We can work with you, in conjunction with your accountants, to review your employees contacts of employment to ensure any tax implications are mitigated as far as possible.

an image of Mike Bracegirdle, a Butcher & Barlow LLP employee

Mike Bracegirdle

an image of Justin Kelly, a Butcher & Barlow LLP employee

Justin Kelly

Contact Mike Bracegirdle on mbracegridle@butcher-barlow.co.uk or call on 07768 512997 or Justin Kelly, head of Corporate and Commercial, and an employment specialist on jkelly@butcher-barlow.co.uk or 07760 629181.


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