HMRC Rules on Employee Accommodation Expenses
A practical guide to when accommodation costs are tax-deductible, how the 24-month rule works, and what contractors and employers need to know before claiming.
Last updated: March 2026
Key Points at a Glance
- HMRC rule: Accommodation is generally allowable when it is wholly, exclusively, and necessarily for a temporary workplace assignment.
- 24-month rule: If the assignment is expected to last more than 24 months, the workplace is usually permanent.
- 40% rule: Spending 40% or more of working time at one location can also trigger permanent workplace status.
- Records: Receipts, invoices, assignment letters, time records, and expected duration documents matter.
This guide is for general information only. HMRC rules can be complex, and specific circumstances may require professional tax advice. Always refer to HMRC employment income guidance for authoritative guidance.
When Accommodation Expenses Are Tax-Deductible
HMRC allows tax relief on accommodation costs when the stay is provided wholly, exclusively, and necessarily for business purposes at a temporary workplace. The practical question is whether the employee has to stay there to perform the assignment.
If the work location is too far from home for daily commuting and the assignment is genuinely temporary, accommodation costs are generally more defensible. If the arrangement looks like a permanent workplace, the tax position changes.
Four Conditions That Must Be Met
Temporary workplace
The assignment location must qualify as temporary, with expected duration usually 24 months or less.
Business necessity
The stay must be required for the work, not simply convenient for the employee.
Reasonable cost
The amount must be reasonable for the location, assignment, and alternatives available.
Clear records
Invoices, assignment letters, and time records should support the claim.
The 24-Month Rule
The 24-month rule is the central HMRC test for temporary workplace accommodation. If an employee is expected to work at a location for 24 months or less, that workplace can usually remain temporary.
If the expected duration extends beyond 24 months, relief is normally lost from the point that expectation changes. Employers should review assignments before the threshold and document any change in duties or location.
Practical controls for employers
- Set review points before month 22 of an assignment.
- Track time spent at each workplace location.
- Keep assignment letters and extension approvals together.
- Separate permanent-base costs from temporary-site costs.
Contractors and Serviced Accommodation
Contractors can claim accommodation costs when the stay is linked to a temporary workplace and the usual business expense tests are met. The rules apply differently depending on employment status, so the company and worker should keep clear records.
Serviced apartments and houses can be easier to evidence than informal bookings because the invoice names the company, property address, stay dates, and all-inclusive cost.
Records to keep
- Accommodation invoices and receipts
- Project assignment letters and expected end dates
- Time records by workplace location
- Travel and accommodation policy documents
- Approvals for project extensions or scope changes
HMRC Accommodation Expenses FAQs
HMRC allows tax relief on accommodation expenses when accommodation is provided wholly, exclusively, and necessarily for business purposes. This usually applies when an employee must stay near a temporary workplace, the assignment is genuinely temporary, and the cost is reasonable.
The 24-month rule is HMRC's key threshold for classifying a workplace as temporary. If an employee is expected to work at a location for 24 months or less, it is generally temporary. If the expected duration extends beyond 24 months, the workplace becomes permanent and relief is usually lost.
Contractors can usually claim accommodation costs when the stay is at a temporary workplace. The exact treatment depends on whether the worker is self-employed, employed, or working through a limited company, and whether the temporary workplace rules are met.
HMRC does not make a special distinction between serviced apartments and hotels for accommodation tax relief. The important question is whether the underlying workplace and business-purpose conditions are met.
Once a workplace exceeds the 24-month threshold, HMRC may treat it as permanent. From that point, accommodation expenses can become taxable or non-deductible, depending on the arrangement and employment status.
Employers should keep assignment letters, expected duration records, time records for each work location, accommodation invoices, receipts, policy documents, and any contract variations or extension approvals.
Construction workers can be covered by industry agreements and project-specific guidance, but each site and assignment still needs to be assessed. Employers working across multiple sites should take professional advice.
Even within the 24-month window, if an employee spends 40% or more of total working time at one location, HMRC may treat that location as permanent. Employers should track time across sites carefully.
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