Farmworkers face tax on accommodation under benefit changes

Farmworker accommodation that is free from tax could soon become a thing of the past, as the government gears up for further tax benefit changes.

Draft legislation due to be debated, recommends that other farm worker benefits, like where an employee has use of their employer’s car for personal use, be removed from tax exemption.

See also: More farm business tax advice

But Mike Harrison, partner of the land, estates and rural business group at accountant Saffery Champness, warns that farmworker accommodation was highlighted in the report as a key issue – and is likely to be next on the government’s list.

Tax-free worker accommodation would become “the exception rather than the rule”, warned Mr Harrison.

The need for a worker to live on-farm for their job, would most likely have to be justified to the Inland Revenue, he said. In such a situation, an arable worker would have much more difficulty than perhaps a livestock worker.

Farm employers should start to make their employees aware that they may have to pay tax on their worker accommodation in the near future, advised Mr Harrison.

Mr Harrison said he believed the government would try to get the legislation through before the general election and then turn its attention to worker accommodation for inclusion in the Autumn Statement 2015.

The proposed changes are:

  • Removal of the £8,500 threshold before employees pay tax on benefits. This will result in all work-based benefits being taxable, no matter how much the employee is paid.
  • To ask employers to voluntarily include taxable expenses in rolling payroll.
  • For all work benefits, no matter how small, to be taxable.