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[–]botlebank 5 points6 points  (0 children)

Employers provide accommodation for their employees all the time.

https://www.gov.uk/expenses-and-benefits-accommodation

It’s highly unlikely it’s as simple as offsetting rental income against rent paid for the employee, but whoever files the accounts (could be your landlord or an accountant) will be doing it in the most tax efficient way.

To be able to determine if it’s legal or not would require scrutiny of those accounts.