New rules introduced in the FA08 enable UK resident individuals who acquired a holiday home abroad through a company to claim exemption from the BIK tax charge for 2008–09 in respect of personal use of the property; and to apply for a refund if they can show that they have paid such tax in previous tax years.

The background to the position is as follows:

• – Chapter 5 of the Income Tax (Earnings and Pensions) Act 2003 sets out the tax treatment when accommodation is provided by an employer [benefit-in-kind]. Unless covered by a specific exemption a tax charge can arise where a property is provided by an employer to their employees, or to a director, when the property is available for their personal use.
• – Some UK resident individuals have set up or acquired companies to own a property abroad, generally for holiday use. Where they direct the company's affairs (whether through an agent or not) they can be within the scope of the living accommodation charge, i.e. a BIK charge.

Essentially the FA08 exemption will apply to individuals who purchased property through a company to acquire a holiday home abroad because of the laws of the country where the property is located, such as France.

Prior to 2008–09, these individuals were subject to Income Tax on the benefit of that living accommodation even where they have not used the company other than to hold the property for their personal use and letting.

The exemption is subject to conditions, full details for which are available at http://www.hmrc.gov.uk/news/hol-home-abroad.htm