Statement by MHA on HMRC ‘naming and shaming’

At MHA we are proud to be one of the few in the care sector to pay our staff at least the Real Living Wage, which is 6.5% higher (and 22% higher in London) than the Government's National Living Wage for those aged 25 and over.

Her Majesty’s Revenue and Customs (HMRC) carried out a routine review of our payroll and identified that we have a very small number of employees who, in some cases, have also chosen to rent accommodation from us.

Due to the way the legislation is written, any rent paid to an employer must be taken into account when reviewing whether an employee has received net pay at least equivalent to the National Minimum Wage. On six occasions, this did not happen, which means we have technically breached the legislation. As is our duty, we have made good the situation and have systems in place to make sure it does not happen again.

However, we fundamentally disagree with HMRC’s approach to accommodation within the legislation and believe that it was not the intention to penalise charities that pay their people well and choose to rent properties.

We robustly challenged their approach and considered it a legal challenge.  However, we could not be certain or limit the costs of a legal challenge or that we could guarantee the outcome. We are conscious that as a charity, we need to direct our work for the benefit of the older people we care for and support.

MHA is proud to pay at a minimum the Real Living Wage to its care workers and other staff. Clearly technical breaches such as this need to be addressed, but it’s vital that the Government comes forward with its long-promised reforms for the care sector, including recognising and remunerating the skills of care workers and proposing a much-needed workforce strategy. 

Note on the way HMRC calculates rented accommodation from an employer

The requirement is that if an employer offers accommodation (as many landlords do) and an employee chooses to rent that accommodation - regardless of whether that is connected directly to the job role or how they pay for the accommodation - the cost of the accommodation must be taken into account when looking at whether the person is receiving the correct Minimum Wage.

The way HMRC does this is by taking the number of hours an individual has actually worked and multiplying that by their hourly rate. Then the cost of rent is deducted from that amount, save for a small accommodation allowance which is much lower than usual market rent.

The amount that is left is then divided by the number of hours they worked in that month to see what the true hourly rate is.  If that amount falls below the minimum wage, then there is a breach.

This means that organisations must subsidise accommodation or prevent employees from having access to rented properties.