House on farm: should accommodation be included in farm employee's gross wages?

Question: We have heard we have to add the value of the accommodation we provide to our farm employee on to their gross wages. Is this true?

Answer: Yes, that's correct. Many farm employees are employed on an agreed gross weekly or fortnightly wage, and in addition they either board in the farmer's home, or the employer provides a house for them. The value of the board or accommodation provided to your employee is taxable income and should be treated as gross income to them.

The value of the accommodation provided must be based on a fair market rental, taking into account the type of accommodation, and the remoteness of the area your farm is in.

Not sure how to establish fair market value rent?

Read our blog post on this topic

The PAYE calculation is based on the total gross wages, which is the agreed gross wage plus the value of the accommodation. 

The total value of accommodation is then deducted from the employee's earnings and paid to the farmer for rent or board.

An example:

Gross wages per week 800.00
Accommodation (fair market rental) 250.00
Total gross income $1,050.00
PAYE (tax code M) (195.36)
Total net income $854.64
Less accommodation (250.00)
Net wages paid to employee $604.64

Would you like further assistance? We offer a range of payroll, employment and HR services to meet the needs of businesses large or small.

E-mail Vicki Cozens, our employment specialist, or request an appointment with her.

       Vicki Cozens, Chartered Accountant at Ean Brown Partners Ltd

Vicki Cozens

Chartered Accountant

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