Allowable business expense
Accommodation paid by an employer for an employee working at a temporary workplace is generally an allowable business expense and not a benefit-in-kind, provided the assignment is expected to last (and does last) no more than 24 months at that workplace.
The 24-month rule
Once an assignment is expected to exceed 24 months at the same location, HMRC treats the workplace as 'permanent' from that point forward, and accommodation costs may become taxable. Track expectation, not just actual duration.
VAT recovery
VAT on business accommodation for employees is generally recoverable input VAT for VAT-registered businesses, when properly invoiced. Ensure suppliers issue full VAT invoices in your company name.
Contractors and PSCs
For contractors operating through a personal service company, IR35 status affects deductibility. Where a contract is genuinely outside IR35, accommodation at a temporary workplace is generally deductible against company income.
Records
Keep clear records: the temporary workplace, the expected duration, the actual dates, and full VAT invoices. This is what HMRC asks for on enquiry.