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Can Your Company Own a Holiday Home? Reward Your Team While Saving Tax
12 February 2026
Accounting & Compliance, Building a Business, People, Reducing Tax, Structuring a Business
Providing a holiday home for staff can be a highly attractive way to motivate, reward, and retain key employees.
When structured correctly, it can be tax-efficient for both the business and those using the property.
How It Works
The company owns or rents a property that employees can use for holidays.
HMRC generally treats this as a benefit in kind (BIK), meaning the employee may pay tax on its value.
This is usually based on:
- Market rental value of the property
- Costs to the company for maintenance and utilities
- Furnishings provided
To make it fair and manageable:
- Implement a booking rota to give everyone equal access
- Allow staff contributions to reduce taxable BIK and employer National Insurance
- Employees who don’t want to use the property are not disadvantaged
Tax Benefits for the Company
Offering a company holiday home isn’t just a great perk it can also help your business:
Corporation Tax Deductions
- Running costs (mortgage interest, rent, utilities, council tax, maintenance, furnishings) are generally allowable expenses.
- This reduces taxable profits while providing a valuable employee benefit.
Employer National Insurance Savings
- NIC is calculated on the taxable BIK, but employee contributions can lower this cost.
Potential VAT Recovery
- Charging employees even a modest fee may allow the business to reclaim VAT on running costs, depending on usage.
Improved Retention and Engagement
- While not a direct tax saving, a motivated, loyal team reduces recruitment and training costs, indirectly supporting profitability.
Structuring for Success
- Fair Access: Use a booking system, especially in larger organisations
- Cost-Sharing: Employees contribute a small fee to lower BIK and company costs
- Record-Keeping: Track usage, contributions, and property expenses for HMRC reporting
- Professional Advice: Work with accountants or payroll specialists to calculate BIK correctly and maximise tax efficiency
Example: Making a Holiday Home Tax-Efficient
Say an employee stays at the accommodation for 1 week.
The employee is a 40% taxpayer.
- Market value weekly rental: £500
- Employee has a BIK of £500, they pay tax at 40% of £200
- Company pays Class 1A NICs at 15% of £75
This approach ensures the perk is affordable, fair, and only impacts employees who benefit.
Turning Perks into Strategic Rewards
A company holiday home isn’t just a nice-to-have it’s a tool to attract, motivate, and retain talent.
Balanced with other perks like flexible working, electric company cars, or learning and development allowances, it creates a compelling package for your team.
Ready to Reward Your Team the Smart Way?
If you’re considering a staff holiday home or want to explore other creative, tax-efficient perks for your team, we can help you:
- Explore strategies that reward your team while keeping costs manageable
- Model costs and BIK calculations accurately
- Maximise tax benefits for the business
- Ensure full compliance with HMRC rules
Get in touch
Call us today on 01634 731390 to discuss how you can design a rewards strategy that keeps your team motivated and your business tax efficient.
Our Services
To read more about what we do and who we work with please see our related pages below:
Blogs related to Retaining and Rewarding Employees:
Take a look at our other blogs on the topic of employee rewards:
Why Employees Really Stay at a Firm: Insights from Leading Thinkers
EMI Scheme Expansion in 2026: A Big Opportunity for Scale-Ups
The content in this blog is correct as of 21st January 2026. See terms and conditions.
