Employer-provided accommodation has recently attracted significant attention, particularly in relation to National Minimum Wage (NMW) compliance. Many employers are unaware that providing accommodation to employees can have a direct impact on NMW calculations, even where living in the accommodation is entirely voluntary and not a requirement of the role.
When accommodation is provided, employers must apply the accommodation offset when assessing whether workers have received at least the National Minimum Wage. From April 2026, the accommodation offset is £11.10 per day (£77.70 per week). This is the maximum amount that can be taken into account when calculating NMW pay.
Any accommodation charge above this limit is treated differently. Rather than simply being considered rent, the excess amount is treated as a deduction from the employee’s pay for NMW purposes, reducing the pay used in the minimum wage calculation.
An Example
Consider an employee who pays £1,330 per month in rent to their employer. Only approximately £330 per month, representing the monthly equivalent of the accommodation offset, can be taken into account when assessing NMW compliance. The remaining £1,000 is treated as a deduction from pay for NMW purposes.
This is where many employers are caught out. After applying the deduction, the employee’s pay must still meet or exceed the National Minimum Wage in every pay reference period. If it falls below the required rate, even for a single pay period, the employer may be found to have underpaid the National Minimum Wage.
The consequences can be significant, including repayment of arrears, financial penalties, and potential public naming by HMRC. As a result, employers providing accommodation should regularly review their arrangements to ensure they remain fully compliant with NMW legislation.
Key Takeaway
Providing accommodation to employees can be a valuable benefit, but it also creates additional National Minimum Wage obligations. Employers should carefully assess accommodation charges against the accommodation offset and ensure that any resulting deductions do not reduce pay below the statutory minimum wage. A proactive review can help avoid costly compliance issues and unwanted scrutiny from HMRC.
For further information please visit the NMW manual via the official government site.
