Accomodation provided for club stewards
Our advice to clubs is that charging rent to an employee for club-provided accommodation should generally be avoided. Charging rent can unintentionally create a tenancy relationship and give rise to adverse tax consequences for both the club and the employee. In addition, any rent charged may reduce the employee’s pay for National Minimum Wage (NMW) purposes, potentially exposing the club to an inadvertent breach of NMW legislation and associated penalties.
From the employee’s perspective, any rent payable must be met from post-tax income. For example, based on 2026/27 tax rates, assuming income tax at 20% and employee National Insurance contributions at 8%, an employee would need to earn a gross salary of approximately £8,333 in order to fund annual rent of £6,000 (£500 per month).
Once rent is received by the club, it will generally be treated as non-mutual income and subject to corporation tax, for most clubs, at a rate of 19%, resulting in a tax liability of £1,140. Furthermore, if the employer’s National Insurance allowance has already been fully utilised, employer National Insurance at 15% would be payable on the employee’s increased gross salary, giving rise to an additional cost of approximately £1,250.
Taken together, the combined impact of corporation tax, income tax and employee and employer National Insurance contributions can amount to a total tax cost of up to £4,723. By contrast, where accommodation is provided rent-free, no such tax liabilities arise.
The provision of rent-free accommodation that is required for the better performance of the employee’s duties remains one of the few valuable tax-free benefits still available. Where cost savings are required, a reduction in the employee’s gross salary, or a properly structured salary sacrifice arrangement, is usually far more tax-efficient than charging rent.
The principal exception relates to the provision of free heating, lighting and other services, which HMRC regard as taxable benefits. To address this, the club should either require the employee to make a contribution towards accommodation-related expenses or report the benefit through the annual P11D return.
The NMW rules are complex. The Government has introduced an accommodation offset (currently £74.62 per week), which affects NMW calculations depending on the amount, if any, charged for accommodation.
Additional points to note:
In summary:
Where employees are provided with free accommodation, it is essential to avoid the creation of a tenancy. Accordingly, no payments should be received or deducted that could be construed as rent. Employees should occupy club accommodation strictly as service occupiers.
An employee who occupies accommodation for the better performance of their duties, is contractually required to do so, and pays no rent will normally be classed as a service occupier and will have no security of tenure. Occupation will therefore cease automatically on termination of employment, even where that termination is later found to have been unfair.