Ireland’s Revenue Commissioners have updated guidance on how accommodation provided through an employer is valued for employee tax purposes. The clarification, announced in Revenue’s 23 October notice, covers homes leased in the employer’s own name and supplied to an employee either without rent or at a subsidised rent. It concerns the value of the accommodation benefit, rather than a new tax rate.
The change appears in paragraph 2.4 of Revenue’s Tax and Duty Manual Part 05-01-01c. The October 2026 version separates arrangements according to who leases the property and whether the employer pays market rent. The manual applies to accommodation supplied for private use and generally covers directors as well as employees, irrespective of their employment earnings, unless it states otherwise. Those distinctions matter because an employer’s actual rental bill is not always the amount treated as the employee’s taxable benefit.
A discounted lease does not always set the taxable value
Where an employer leases a home at market rent in its own name and lets an employee live there, Revenue treats the accommodation as a benefit in kind under section 118 of the Taxes Consolidation Act 1997. The value used for Income Tax, PRSI and USC is the rent paid, less any contribution the employee makes to the employer for the accommodation.
The manual describes a different valuation when the employer itself secures a lease below market rent. In that case, the taxable benefit is generally the property’s full market rental value, rather than the lower amount paid by the employer. That value is reduced by an amount the employee is required to pay, and actually pays, directly back to the employer.
Revenue illustrates the distinction with an employer paying €500 a month for accommodation whose market rent is €1,000. The employee lives there rent free. In that example, €1,000 a month is added to salary as notional pay for calculating Income Tax, PRSI and USC. The example does not describe a €1,000 tax bill: it identifies the benefit amount entering the calculation.
A separate example involves an employer paying market rent of €1,500 a month for a home supplied rent free to an employee. Revenue says the notional pay in that case is €1,500 monthly. Read together, the examples show why the relationship between the agreed rent and the market rent is relevant to the valuation.
The name on the lease also matters
The manual distinguishes those employer-held leases from a property rented by an employee in their own name, with the employer paying the rent. Revenue calls that payment a perquisite taxable under section 112, rather than the section 118 accommodation benefit described for an employer-held lease. Its value is the actual rent paid, minus any amount the employee makes good to the employer.
For this arrangement, Revenue gives an example of €1,500 monthly rent and a €200 employee contribution. The resulting notional pay is €1,300 a month. These are illustrations in the official manual, not individual assessments or estimates of what any particular worker owes.
Updated guidance, not a universal housing exemption
The wider manual also covers properties owned by employers. Their annual accommodation value is based on the rent reasonably obtainable for the property, with related expenses such as light and heat included in the benefit calculation. Revenue says the annual value should be established when the accommodation is first provided and reviewed annually while it remains available to the employee.
That employer-owned section says employers should be able to support the market rent used. It identifies an independent auctioneer’s or letting agent’s estimate, and relevant rental figures on the Central Statistics Office website, as possible supporting information. Payments the employee is required to make, and actually makes directly to the employer, reduce the annual value. A benefit shared between employees is apportioned.
Revenue’s 23 October notice specifically announces additional guidance on rented accommodation. It does not announce a blanket exemption for employer-provided housing or a change to the tax rates charged on employment income. The manual itself states that it is guidance, not professional advice, and does not provide a definitive answer for every case. The current clarification should therefore be read within the arrangements and conditions it actually describes.
Related international coverage: Britain’s proposed new-parent dismissal protections and the UK Budget’s pending household measures. These concern separate UK policies, not Irish tax rules.
