Equestrian businesses warned of minimum wage complexities that can arise from staff accommodation

An HMRC dispute over grooms’ accommodation has highlighted the need for businesses to be aware of the complexities surrounding national minimum wage (NMW) rules.

Coach Rebecca Cowderoy has spoken out after she believed she was following the correct procedure around NMW and staff accommodation – but was found to have incurred NMW arrears owing to confusion around the HMRC accommodation offset rate.

When staff accommodation is provided and the charge meets or is below the offset rate, an employer may deduct this from an employee’s wage for rent. The accommodation charge can also be kept separate so the employee receives their full wage then pays the employer the offset amount, or rent if the amount is lower. If the accommodation costs more than the offset rate, this excess results in the worker’s wage falling below NWM, so the employer must increase the wage to ensure NMW is paid.

In 2021 Rebecca rented property for staff as she did not have accommodation at her yard. She charged only what she was paying on rent, and covered all bills. At the time the weekly offset rate was £58.52 and Rebecca unknowingly accrued £4,179.44 NMW arrears over 12 months relating to one employee.

Having been one of multiple equestrian employers named on the Government’s recent NMW penalty list, Rebecca hopes to make others aware of the complexities around accommodation.

“I was paying NMW or above. I wasn’t trying to get around NMW,” Rebecca told H&H. “I was trying to provide them with somewhere decent to live. I wanted them to have somewhere clean, warm and comfortable – not make money from housing them.”

Rebecca believes the offset rate – which rises annually and is currently £77.60 – is too low.

“This raises a question; is the offset realistic for employers who are trying to provide decent accommodation?” she said.

“Unless you expect someone to share with three or four people or live in a static caravan, it simply wasn’t realistic in my circumstances. The whole experience was incredibly expensive and upsetting, and it has made me realise how important it is to understand how the rules work. What may seem like a perfectly reasonable arrangement can have serious financial consequences.”

Trainer Lucinda Russell – who employs 60 staff, all of whom are paid above minimum wage – was another to be named on the NMW list. Lucinda told H&H the £2,158.39 arrears related to two jockeys and was the result of an error made between October 2023 and 2024 relating to deductions for staff accommodation for one, and livery for the other. The matter has been resolved.

Jodie Seddon, a partner at Aria Grace Law CIC, told H&H: “Under HMRC rules the standard of staff accommodation provided is not relevant to the amount of offset that employers can withhold from salaries; it is a fixed amount, adjusted annually alongside NMW.

“It is great to see more equestrian employers trying to put in place proper arrangements, but we would always encourage people to seek professional advice at the outset – the expense is minimal by comparison with the potential penalties for errors.”

Dan Martin of chartered accountants Ellacotts told H&H accommodation arrangements in many cases are “genuinely generous”.

“The difficulty for the equestrian sector is that generosity is no defence. Layer on other complications, unpaid time at shows, early starts and late nights, travelling days, keep for a groom’s horse, apprentice rates and birthday rate changes, and it becomes easy to fall below the line without any intent to underpay,” he said.

“The employers who end up on the list are rarely the bad actors. They are usually small, well-meaning businesses running payroll without specialist support.”

Mr Martin added that the most common misconception his firm sees is the “belief that if rent is invoiced separately, or paid out of the groom’s bank account, it sits outside payroll and NMW calculation”.

“If the yard owns or rents the cottage, flat or caravan, or if living on site is tied to the job, the offset applies regardless of how the rent is collected. Employers who believe they have structured around the problem are often the ones who get caught,” he said.

Confusion also arises over utility bills, which must be factored into the total accommodation charge under the offset rules. Mr Martin said only charges that are “genuinely optional” fall outside, though these are still tested under ordinary NMW deduction rules.

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