---
title: 'The Accommodation Offset: Getting Staff Housing Right for NMW'
description: How the accommodation offset works under the NMW Regulations, why hospitality
  operators miscalculate it, and what HMRC does when they do.
source: Duty Room
source_url: https://dutyroom.com
published_on: '2026-05-18'
updated_on: '2026-05-18'
market: uk
sectors:
- all
category: explainer
canonical_url: https://dutyroom.com/uk/briefings/accommodation-offset-nmw
---

# The Accommodation Offset: Getting Staff Housing Right for NMW

How the accommodation offset works under the NMW Regulations, why hospitality operators miscalculate it, and what HMRC does when they do.

A pub company charges its live-in manager £120 a week for the flat above the bar. The flat is worth twice that on the open market. The manager earns £12.71 an hour. On paper, everything looks fine. Then HMRC calculates the effective hourly rate, and the company ends up on the [naming list](https://www.gov.uk/government/publications/enforcing-national-minimum-wage-law/national-minimum-wage-policy-on-enforcement-prosecutions-and-naming-employers-who-break-national-minimum-wage-law).

The accommodation offset is the only benefit-in-kind that counts towards the [National Minimum Wage](https://www.gov.uk/national-minimum-wage-rates). Not meals. Not a company car. Not childcare vouchers. Only accommodation. And the rules around it are strict enough that major hospitality brands, including [Shepherd Neame, Mitchells & Butlers, and City Pub Group](https://dutyroom.com/uk/reports/hmrc-nmw-naming-rounds), have been publicly named for getting the calculation wrong.


## The offset rate

From April 2026, the [accommodation offset](https://www.gov.uk/national-minimum-wage-accommodation) is **£11.10 per day** (£77.70 per week).

That figure is a cap, not a target. It sets the maximum amount an employer can charge for accommodation before it starts eating into a worker's pay for NMW purposes.

Previous rates for reference:

| Year | Daily rate | Weekly rate |
|---|---|---|
| 2026 | £11.10 | £77.70 |
| 2025 | £10.66 | £74.62 |
| 2024 | £9.99 | £69.93 |

The rate changes every April. New rates are typically published by HMRC in February or March ahead of the April effective date. Operators providing live-in accommodation typically align the payroll update to the same April effective date, treating the rate publication as the trigger for checking current accommodation charges against the new cap.


## How the calculation works

Three scenarios.

**Charge below the offset.** A hotel charges kitchen staff £60 a week for a shared house. The offset is £77.70. The charge is below the cap, so there is no impact on NMW calculations. The worker's pay stands as it is.

**Charge above the offset.** A pub charges its live-in manager £120 a week. The offset is £77.70. The difference, £42.30, is treated as a deduction from pay for NMW purposes. If that deduction pushes the manager's effective hourly rate below £12.71, there is a breach. It does not matter that £120 a week is below market rent for the area. The offset is the offset.

**Accommodation provided free.** The full offset, £77.70 per week, is added to the worker's pay for NMW purposes. Free accommodation works in the employer's favour.

Under the NMW Regulations, the charge includes everything connected to the accommodation: rent, utilities, furniture, laundry. A charge of £77.70 for the room with a separate £30 for electricity on top would be treated as a single accommodation charge of £107.70 and measured against the offset in full.


## The pub and hotel trap

Live-in arrangements are common across hospitality. Pub managers in tied accommodation. Hotel workers in staff housing. Seasonal staff in rooms above the restaurant. Every one of these is exposed to the same calculation.

The trap is market thinking. A landlord looks at the flat above the pub and thinks: this would let for £800 a month on the open market. Charging £500 feels generous. But £500 a month is roughly £115 a week. That is £37.30 above the offset. For a manager working 45 hours a week at £12.71 an hour, that £37.30 weekly deduction drops their effective rate to about £11.88. Below the NMW floor. A breach.

The correct test is to work backwards from the worker's hourly rate, subtract the excess accommodation charge spread across their hours, and confirm the result still clears £12.71.

The calculation at April 2026 rates reads as follows:

| Role | Weekly hours | Weekly gross pay | Accommodation charge | Excess over offset | Effective hourly rate | Compliant? |
|---|---|---|---|---|---|---|
| Head chef | 40 | £580.00 | £77.70 | £0.00 | £14.50 | Yes |
| Duty manager | 48 | £680.00 | £120.00 | £42.30 | £13.30 | Yes |
| Duty manager | 48 | £680.00 | £160.00 | £82.30 | £12.29 | **No** |
| FOH (variable) | 30 | £420.00 | £100.00 | £22.30 | £13.26 | Yes |
| FOH (variable) | 24 | £336.00 | £100.00 | £22.30 | £13.07 | Yes |
| FOH (variable) | 20 | £280.00 | £100.00 | £22.30 | £12.89 | Yes |

The FOH rows illustrate the variable-hours exposure: the same £100 weekly charge is compliant at 24 hours and would become non-compliant if hours dropped below roughly 19. A minimum-hours floor of 20 provides only a narrow buffer at that charge level.


## Calculate it per pay reference period

The offset is calculated per pay reference period, not annually. A monthly-paid manager has a monthly pay reference period. A weekly-paid kitchen porter has a weekly one.

If hours vary between periods (and in hospitality, they often do), the same accommodation charge can be compliant in a busy month and non-compliant in a quiet one. Fewer hours means the accommodation deduction has a larger per-hour impact.

A manager who works 50 hours a week during December and 35 hours a week in January pays the same rent both months. The NMW impact is different in each period. Operators with variable-hours live-in staff typically model both the busiest and quietest expected periods before confirming a charge.


## Records

The NMW Regulations require employers to keep records sufficient to show that the minimum wage has been paid for every pay reference period where accommodation is provided. HMRC's guidance specifies that those records must cover:

- The accommodation charge, broken down if it includes utilities or other costs
- The offset rate applied (which changes annually)
- Hours worked in each pay reference period
- The resulting effective hourly rate after the offset calculation

The civil recovery period for NMW underpayment claims is [six years](https://www.gov.uk/national-minimum-wage-accommodation), and records must be kept for that period. From 7 April 2026, the [Fair Work Agency](https://dutyroom.com/uk/briefings/fair-work-agency-hospitality) enforces NMW in place of HMRC. The record-keeping obligation is unchanged.

Published enforcement guidance makes clear that where records are absent, investigators do not give employers the benefit of the doubt.


## Correcting historical shortfalls

Operators who identify a past underpayment typically calculate the arrears for each affected pay reference period, working back to the point the charge or the hours first created a shortfall. They then top up the worker's next pay packet for that full amount, noting the correction in the payroll file. The six-year civil recovery window under the NMW Regulations means the scope of any correction exercise runs back that far at maximum, though the practical starting point is usually the last April rate change that went un-modelled. Where the breach spans multiple workers or multiple rate years, operators commonly produce a schedule listing each period, the shortfall per period, and the gross arrears figure, which then forms part of the payroll record. In investigations where operators had already self-corrected and documented the process before contact from the Fair Work Agency, the enforcement record shows a markedly different trajectory than cases where arrears were discovered by investigators with no prior internal remediation on file.


## Getting it right

The accommodation offset is the only benefit-in-kind that counts towards NMW. Everything else an employer provides, from staff meals to transport, sits outside the NMW calculation entirely.

For operators running the annual cycle, practice converges on four steps. First, when the revised offset rate is published (typically February or March), review current accommodation charges against the new cap before the April effective date. Second, model the effective hourly rate for every worker in live-in accommodation across the range of expected hours. Include their quietest anticipated pay reference period, not just a typical one. Third, document the arrangement in writing: what is provided, what is charged, and which offset rate was applied. Fourth, notify affected workers of any change to their accommodation charge before the new rate takes effect.

Naming list cases show that the most common error is failing to recheck effective hourly rates when the offset rate changes each April. Operators who appeared in HMRC enforcement records for accommodation offset breaches consistently failed at the first step: the rate changed, the charge did not, and the shortfall compounded across multiple pay reference periods before investigation. The six-year civil recovery window means that a missed April update can generate arrears claims stretching back to 2020.

For the full picture on NMW traps in hospitality, including uniforms, unpaid training, clock-rounding, and tips, see our [employment records resources](https://dutyroom.com/uk/resources/employment-records).

---

Published by [Duty Room](https://dutyroom.com/uk/), software for organizing, tracking, and evidencing operational compliance.