NMWM10200 - Accommodation and accommodation offset: examples of calculating pay for National Minimum Wage where accommodation is provided free of charge
Source: gov.uk (2025-11-05)


Relevant legislation (#IDAPPW4H)Explanation (#IDAMQW4H)Example 1 (#IDAJRW4H)Example 2 (#IDACTW4H)Example 3 (#IDA1UW4H)

Relevant legislation

The legislation that applies to this page is as follows:
- National Minimum Wage Regulations 2015, regulations 9(1)(e)(i)-(ii) & 16
Explanation

When living accommodation is provided free of charge, a notional amount is added to the worker’s pay to calculate their National Minimum Wage pay (NMWM10030 (https://www.gov.uk/hmrc-internal-manuals/national-minimum-wage-manual/nmwm10030)).

In these three examples the rates are based on those that applied for the 2012/13 rate year:
- Main rate: £6.31
- Accommodation offset rate: £4.91 per day (£34.37 weekly maximum)
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Example 1

A worker is entitled to be paid the National Minimum Wage at the main rate. Their pay reference period is a week. They are paid the main rate per hour for a 45-hour week. Accommodation is provided without charge by their employer five days a week.

Total weekly pay: £6.31 x 45 = £283.95

Rent charged: £0

To calculate their National Minimum Wage pay:
- Identify the applicable notional offset:
- £4.91 x 5 = £24.55
- Add the applicable notional offset to their weekly pay:
- £283.95 + £24.55 = £308.50
- Find their hourly rate by dividing National Minimum Wage pay by hours worked: £308.50 ÷ 45 = £6.86 per hour
For National Minimum Wage purposes, the worker's hourly rate is £6.73 an hour. This rate is more than the National Minimum Wage.

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Example 2

A worker is entitled to be paid the National Minimum Wage at the main rate. Their pay reference period is a calendar month. They are paid £5.50 an hour for working 160 hours per month. £5.50 is below the main rate. Accommodation is provided without charge by their employer for 31 days during a month.

Total monthly pay: £5.50 x 160 = £880.00

Rent charged: £0

To calculate their National Minimum Wage pay:
- Identify the applicable notional offset:
- £4.91 x 31 = £152.21
- Add the notional offset to the monthly pay:
- £880.00 + £152.21 = £1032.21
- Find their hourly rate by dividing National Minimum Wage pay by hours worked: £1032.21 ÷ 160 = £6.45 per hour
For National Minimum Wage pay purposes, the worker's hourly rate is £6.45 an hour. This rate is more than the National Minimum Wage.

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Example 3

A worker is entitled to be paid the National Minimum Wage at the main rate. Their pay reference period is a week. They are paid £5.00 an hour for a 45-hour week. £5.00 is below the main rate. Accommodation is provided without charge by their employer seven days a week.

Total weekly pay: £5.00 x 45 = £225.00

Rent charged: £0

To calculate National Minimum Wage pay:
- Identify the applicable notional offset:
- £4.91 x 7 = £34.37
- Add the applicable notional offset to the weekly pay:
- £225.00 + £34.37 = £259.37
- Find their hourly rate by dividing National Minimum Wage pay by hours worked: £259.37 ÷ 45 = £5.76 per hour.
For National Minimum Wage pay purposes, the worker's hourly rate is £5.76 an hour. This rate is less than the National Minimum Wage and the employer will need to correct any underpayment and increase the hourly rate to at least National Minimum Wage.