Time to increase the rent, I guess

[Danglekt]

especially if there is duality of use (private study 10% business office 90%)

10% private? Well if some people's activity on this forum is classed as private I think that 10% needs bumping up a bit....

[Underbase]

Small business rate relief is based on ratable value not rent. RV is determined by District Valuer.

In practice a small business use of home, with or without rent, is disregarded for business rates, especially if there is duality of use (private study 10% business office 90%)

As was the OP, I was joking.

[Jessica@WhiteFieldTax]

As was the OP, I was joking.

Well, joking aside, for some people rent will have merit in the post 16/17 world.

[Contreras]

So, MyCo has been paying me £4 / week for the use of my home office.

That's way below market rate, though. Seems like the government thinks a room should be worth £7500 a year, starting next year, based on Rent a Room. Maybe that's too high outside of London, though. I'll charge a nice conservative £4K / year to rent a room to MyCo Ltd. Hard to argue you could rent a room for less than that, most places, so it would be hard for the tax man to say it is above market rate. After all, it includes utilities, etc.

That will be £2K each for my wife and I. Sure, we'll pay basic rate tax on it (we're staying below the higher rate threshold). It is rental income, after all. Rent a Room doesn't apply for businesses. So, 20% on our income tax, but it is rent, not salary, so no NI. Total tax hit £400 each, £800 total.

It is also a legitimate business expense. So no CT. And no dividend tax. If the company didn't pay market rent, it would have an extra £4K profit. £800 CT. £3200 to disperse as dividends, incurring dividend tax of £240. Total tax hit £1040.

Sure, it isn't a lot. But why should anyone expect me to subsidise MyCo with virtually free premises? After all, the government has decided to stick it to MyCo, so I might as well, too. If it saves a little on taxes, all to the good.

Yes you can do this. But forget any fanciful ideas about Rent a Room or linking to market rent rates.

Have a trawl through the HMRC site for guidance on apportioning of home costs for business use.

Expect to be challenged if you take the pi$$ though.

Most people claim the £4 because it's a "no questions asked" allowance.

[WordIsBond]

Well, joking aside, for some people rent will have merit in the post 16/17 world.

Yes, it will, I guess. But the savings isn't very much and then you have to justify that it isn't excessive. Hardly worth the hassle, it seems to me.

Have a trawl through the HMRC site for guidance on apportioning of home costs for business use.

Expect to be challenged if you take the pi$$ though.

Most people claim the £4 because it's a "no questions asked" allowance.

That HMRC guidance (and the £4) is on how much you can take tax free. I was proposing to declare it as income (minus HMRC-approved expenses, of course).

Yes, I think it is probably legal, and as Jessica said a lot of people might do it. But it seems to make you a target, for not much benefit. £240 / year? And they'll change the rules in three years and suddenly it will trigger capital gains when I sell my house, or something.

And once you are on their radar, they'll find something else, or manufacture something else.

When everyone else is doing this and HMRC aren't challenging it, then maybe I'll do it too.

[d000hg]

10% private? Well if some people's activity on this forum is classed as private I think that 10% needs bumping up a bit....

So you don't go into your home office at all outside working hours? Use your PC for some gaming in the evening, etc...

[SueEllen]

So you don't go into your home office at all outside working hours? Use your PC for some gaming in the evening, etc...

Laptops and tablets are portable devices.

[The Spartan]

So you don't go into your home office at all outside working hours? Use your PC for some gaming in the evening, etc...

Does a home office have working hours? I think not.

I use a room in my house solely as a home office, it has all my equipment in there such as servers, desktop, paperwork etc. Neither my wife or daughter go into that room as they it's to be treated as an office.

[Jessica@WhiteFieldTax]

Does a home office have working hours? I think not.

I use a room in my house solely as a home office, it has all my equipment in there such as servers, desktop, paperwork etc. Neither my wife or daughter go into that room as they it's to be treated as an office.

You could say that, but in terms of rates, CGT, planning permission and insurance you may not want to.

[SandyD]

You could say that, but in terms of rates, CGT, planning permission and insurance you may not want to.

Jessica, I thought CGT, planning permission would not apply, I believe on some HMRC literature for small businesses its exempt, they gave examples such as hairdressers/physio therapists, chiropractors etc who use one room their house as their working place to receive clients etc...