Resident wardens' potential tax liability
The National Housing Federation, with support from its tax advice partner KPMG, has secured a tax concession which will save some sheltered housing providers significant sums dating back to 5 April 2000.
HMRC has agreed that for fiscal years up to 5 April 2006, the provision of employee accommodation to wardens of sheltered schemes by housing associations is exempt from tax. The exemption also applies to any utilities (for example, water, heating, lighting, council tax, etc) provided with the accommodation.
However, for fiscal years commencing from 6 April 2006 onwards, the benefit will be taxable. Associations have three choices on how they can offer wardens accommodation. Depending upon the choice made, associations will need to declare the value of any benefit on P11D returns annually to HMRC for each employee.
For the tax years 2006/07 and 2007/08, associations will already have an obligation to disclose the benefit for each employee. HMRC will be entitled to levy penalties to associations for each employee per year, where associations have failed to submit P11Ds or failed to include the accommodation benefit in P11Ds already submitted.
Therefore, associations may need advice in relation to:
- calculating annual taxable accommodation benefit
- completing P11D declarations
- minimising past tax and penalty liabilities and
- possible recovery of tax overpaid for periods prior to 5 April 2006.
For further information see the briefing on the Federation website - www.housing.org.uk
