The accommodation offset for live-in staff

What the offset is

Living accommodation is the only benefit in kind that can count towards a worker's minimum wage pay. The government's guidance says so directly, and adds that it counts "only to a limited extent". The limit is the accommodation offset, a daily amount set each April. From April 2026 it is £11.10 a day, or £77.70 a week.

The offset does not reflect the market rent of the room or what it costs you to provide. The guidance says it is there "to discourage employers from trying to recoup the minimum wage paid to workers by charging excessive accommodation charges". To count, the accommodation has to give the worker unrestricted access to somewhere suitable for day-to-day living.

The offset matters most in hotels, country pubs and seasonal businesses where staff live on site. It applies in the same way to a worker on the National Living Wage, a younger worker on a lower rate and an apprentice.

How a room charge affects minimum wage pay

There are three ways to provide a room, and the offset works in each:

• Free. The offset is added to the worker's pay when you check it against the minimum wage, up to the daily rate for each day the room is provided.
• Charged at or below the offset. The charge has no effect on minimum wage pay.
• Charged above the offset. The amount above the offset is taken off the worker's pay for minimum wage purposes. The guidance says "the worker's minimum wage pay will only be reduced if you charge more than the amount of the accommodation offset".

It makes no difference whether the charge is deducted from wages or paid by the worker after payday. Both are treated as a charge for the room.

A live-in worker charged £100 a week for a room

• 40 hours at £12.71£508.40
• Room charge£100.00
• Offset for 7 days at £11.10£77.70
• Charge above the offset, taken off minimum wage pay£22.30
• Minimum wage pay: £508.40 less £22.30£486.10
• Hourly rate for minimum wage purposes£12.15
• Extra pay needed to reach £12.71 an hour£22.30

The worker's hourly rate on the payslip is £12.71, but the £22.30 charged above the offset brings it to £12.15 for minimum wage purposes. The employer either pays £22.30 more each week or brings the charge down to £77.70.

A live-in worker given a room free

• 40 hours at £11.00£440.00
• Offset for 7 days at £11.10, added to pay£77.70
• Minimum wage pay£517.70
• Hourly rate for minimum wage purposes: £517.70 ÷ 40£12.94

Utilities, furniture and other charges

The guidance says any charges the worker is obliged to pay as a condition of being provided with the room, "including amounts for gas, electricity, water and provision of furniture", count as part of the charge for the room. A £70 room charge plus a £15 weekly charge for heating and electricity is an £85 charge, which is £7.30 above the weekly offset.

Other benefits in kind do not count towards minimum wage pay, whatever their value. Meals, a free staff drink and parking are all left out of the sum.

What counts as providing accommodation

The offset rules apply "whenever you provide living accommodation to a worker", and not only where you own the building. You are treated as providing it, whoever owns it, where:

• the accommodation is provided in connection with the worker's contract
• the worker's job depends on living in particular accommodation
• the worker can live there only while they stay in a particular job

Even where the job and the room do not depend on each other, you are still treated as providing the room if you own or sublet it, if the owner is in the same group of companies as you or trades in association with you, if the two businesses have owners, partners, directors or shareholders in common, or if you or one of those people receives money or another benefit from the owner. Family members of a director, partner, shareholder or owner count as third parties for these purposes.

A room the worker can choose to take is still provided: "Even if the provision of living accommodation is optional, where the worker chooses to accept the offer, the accommodation offset will apply."

Working it out each pay period

Minimum wage is checked for each pay reference period, which is the period a worker is paid for and is never longer than a month. For each period:

1. Work out the worker's pay for minimum wage purposes, leaving out tips, service charges and benefits in kind other than the room.
2. Count the days the room was provided in that period and multiply by the daily offset.
3. If the room was free, add that figure to pay.
4. If the room was charged, take off any charge, including utilities and furniture, above that figure.
5. Divide the result by the hours worked and compare it with the worker's minimum wage rate.

New rates apply from the first pay reference period that starts on or after the date they change. A monthly period that starts on 28 March 2027 is checked at the 2026/27 rates for the whole month.

Sickness and holiday

Where a worker paid by the hour is absent for a day or more, is paid at least the minimum wage for the absence, works fewer hours as a result, and the room charge does not change, the charge is scaled down before the offset is applied. You multiply the charge by the hours worked and divide by the hours the worker would have worked without the absence. Where the absence is unpaid, the charge is not adjusted.

Meals, uniforms and other deductions

Deductions for meals are treated separately from the room. The guidance says that if you provide meals, "any deductions for these may reduce a worker's pay for minimum wage purposes", even where the worker asked for them. A payment the worker freely makes after payday for meals they choose to buy does not reduce it.

Deductions for uniforms you require always reduce minimum wage pay, whether the worker buys the uniform from you or elsewhere. A reasonable contractual charge for a uniform the worker damages through misconduct, loses or does not return does not. Fees for payslips, and charges for tools or equipment the worker pays for and is not repaid, reduce it.

Staff accommodation and meals also have a VAT side. VAT Notice 709/3, section 4.2, says that where staff pay for accommodation or meals in your hotel, "the payments are treated as including VAT and you must account for it on your VAT Return".

The April 2027 rates

The Budget on 28 October 2026 announced that the National Living Wage will rise by 3.9% to £13.21 an hour in April 2027, and the accommodation offset to £11.53 a day. Both apply from the first pay reference period starting on or after the change.

Accommodation offset rates

From	Daily rate	Weekly rate
April 2024	£9.99	£69.93
April 2025	£10.66	£74.62
April 2026	£11.10	£77.70
April 2027, announced	£11.53	£80.71 (7 × £11.53)

A room charge that sits at or below £77.70 a week this year will still sit below the offset next year if it does not rise above £80.71 a week. Pay set at £12.71 an hour will need to rise to £13.21 for workers aged 21 and over.

Common mistakes and what HMRC does

• Counting the market value of a room, or the cost of providing it, as pay.
• Leaving utilities and furniture charges out of the room charge.
• Using the weekly offset for a room provided on only some days of the week.
• Treating a room owned by a sister company, or by a director's family, as outside the rules.
• Counting free meals towards minimum wage pay.
• Checking pay against the minimum wage for a month at a time when staff are paid weekly.
• Keeping last year's room charge after the minimum wage rises.

HM Revenue and Customs enforces the minimum wage. Where it finds underpayment it issues a notice of underpayment for the arrears, which are worked out at the current rate, and a penalty of up to 200% of the arrears, capped at £20,000 per worker. The penalty is halved if the notice is paid in full within 14 days. Employers can be named publicly, and paying less than the minimum wage is a criminal offence. An employer who finds an underpayment can pay the arrears and make a voluntary declaration to HMRC.

Records and deadlines

• For each live-in worker: the room, the days it was provided in each pay reference period, and every charge for it, including utilities and furniture.
• The written agreement or contract term covering the room.
• Hours worked and pay for each pay reference period, with the minimum wage check for that period.
• Records showing the minimum wage was paid, kept for at least 6 years. HMRC accepts them as a single document for each pay reference period.
• PAYE records kept for 3 years from the end of the tax year.
• Room charges reviewed before the first pay reference period starting on or after the April 2027 change.

How we help

We record each live-in worker's room, days and charges in the payroll and check every pay period against the minimum wage with the offset applied. Before April 2027 we work out the room charge and hourly pay each worker needs at the new rates. More on payroll, tips and tronc, and for hotels and B&Bs.