Suppose my company rents an entire three-bedroom apartment for £900 per month all in (including rates, utilities and internet) and then sub-lets one room each to two permanent employees (one also being a company director) for £300 per room per month, with the remaining room being used for temporary employees working at the same location on an irregular basis. What would be the tax implications? Asthe employees are paying the going rate for their room is it more straightforward?

Arthur Weller replies:
If an employer provides an employee with living accommodation, the employee is charged to tax on the amount by which the rent paid by the employer exceeds any amount made good by the employee (see HMRC’s Employment Income manual at www.gov.uk/hmrc-internalmanuals/employment-income-manual/eim11402). From what you have described it would appear that since the employees make good all the cost to the employer (i.e. £900 divided by 3) there is no income tax charge on the employees.