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Section 107 ITEPA 2003

This page shows how to calculate the cost of providing living accommodation in a market value basis case (see EIM11477). For an example of how you use this figure to arrive at the amount of the Section 106 ITEPA 2003 living accommodation benefit see example EIM11484.

For information on whether there is a benefit under Section 105 or 106 see EIM11428.

For deciding whether the cost of providing living accommodation is on the cost basis or the market value basis see EIM11473.
### Example

A house that had been owned by the employer since 1972 was first occupied by a particular employee on 6 April 1998 when its market value was 拢130,000 (MV). It cost the employer 拢60,000 in 1972 and an extension was built in 1981 at a cost of 拢18,000.

As the total cost of the property exceeds 拢75,000, this employee first occupied it after 30 March 1983 and the employer had owned it for at least six years by 6 April 1998 (the date of this employee鈥檚 first occupation of it), the market value rule applies. The cost of providing the accommodation is the market value on 6 April 1998 of the employer鈥檚 freehold interest, that is 拢130,000.

If instead of first occupying the property on 6 April 1998, this employee had done so on 6 April 1982, the cost basis (see EIM11429) would apply because that date precedes 31 March 1983. The cost of providing the accommodation would then be the cost of the property in 1972, 拢60,000, plus the improvements of 拢18,000 in 1981, a total of 拢78,000.