July 23, 2021


Accommodation provided to farm employees (except for company directors/shareholders) has historically been treated typically as a tax-free benefit. This is based on over 40-year-old legislation which allows exemption because the accommodation is either necessary for them to do their job or it is customary to be provided with accommodation.

For some workers the tax-free status has been reliant on a long-standing Extra Statutory Concession (ESC) for Representative Occupiers. HMRC announced this ESC would be removed from 1 April 2021. Despite lobbying the ESC has been removed and this could result in tax and national insurance charges going forward. Therefore, landowners should review the status of their accommodation provided to current and retired workers.

Agricultural workers and retired agricultural workers and their widows

The statutory exemption remains in place where accommodation is provided for the proper performance of the employee’s duties. This would apply to most agricultural workers, and retired agricultural workers and their widows, required to live on the farm or estate. However, to protect the exemption it is important the contract of employment reflects they must live in the accommodation to perform their duties.

Non-agricultural workers and retired non-agricultural workers

For those who relied on the concession (posts, and successors to those posts, in place before 6 April 1977 where it was a requirement to live in the property as a condition of their employment) it will be necessary to consider whether they continue to qualify for a tax-free benefit under the statutory exemption. For this to apply the living accommodation must either be:

  • Necessary for the proper performance of duties; Customarily provided for the better performance of duties; or
  • Required for the personal security of the employee. HMRC has agreed that many farmworkers should be covered by the ‘necessary’ exemption but there could be issues for other positions, particularly if it is not customary for accommodation to be provided for the type of position. To be customary, it must be normal practice, with more than half the employees of that class being provided with accommodation.

The type of employees who could be affected by the removal of the ESC would therefore be gamekeepers, property maintenance staff, on-call estate workers, gardeners, chefs, resident agents, or farm managers. For these employees to continue to be covered by the statutory exemption there will need to be good evidence that the accommodation does enable the proper performance of duties, or better performance is reliant on the provision of the accommodation.


All employers should review their accommodation use and consider whether any employee or retired employer-provided accommodation will continue to be tax-free. The removal of the ESC leaves many employers with huge uncertainty on whether their employees will continue to be exempt.

The statutory exemption is very out of date and does not reflect changes in the workplace, particularly for farms and estates that have diversified. The CLA and other bodies are continuing to lobby and provide Treasury with examples of the unintended economic consequences for rural businesses and the community. The impact on retired employees of a potential tax charge and pressure on farms and estates to raise salaries for workers to pay for the tax due will be damaging on rural businesses and communities, putting jobs at risk and more pressure on the need for affordable housing.


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