National Minimum Wage and National Living Wage - benefits in kind and accommodation

National Minimum Wage and Living Wage - benefits in kind


Benefits in kind, except accommodation, do not count towards minimum wage pay. It makes no difference whether a value is attached to the benefits. Neither does it make any difference whether the benefit is taxable or not.

It remains open, of course, to you to offer such benefits to the worker. But, if you do, the value or notional value of the benefits cannot be counted towards minimum wage pay.

Benefits in kind examples

Examples of benefits in kind that do not count towards minimum wage pay, include:

  • meals
  • fuel
  • car
  • employer's contribution to the worker's pension fund
  • assistance with removals
  • medical insurance
  • luncheon vouchers
  • child care vouchers

Living accommodation and minimum wage pay

Living accommodation provided by the employer to the worker is the only benefit in kind that can count towards a worker's minimum wage pay. You may:

  • deduct rent from the worker's pay
  • charge a specific amount once the worker has received their pay
  • provide accommodation on an uncharged basis as part of a package

In all these cases, the rules allow a notional amount called the accommodation offset to count towards minimum wage pay.

Where you charge the worker for the accommodation, either by making a deduction from the worker's pay or by accepting a payment from the worker, the worker's minimum wage pay will only be affected if you charge more than the accommodation offset. The amount of the charge over and above the level of the offset will reduce the worker's pay for minimum wage pay purposes.

Reasons for the accommodation offset

The accommodation offset is intended to discourage employers from recouping the minimum wage paid to a worker by levying excessive accommodation charges.

The accommodation offset rate doesn't seek to reflect the actual cost to you or the actual value of renting accommodation for the worker. Allowing a market rate would not recognise the advantages to you of providing accommodation. Also, the standard and types of accommodation and consequently the market value of accommodation can vary considerably.