How Do you have your Ltd Co. Setup?

[ASB]

Now that is interesting.
So you can claim some amounts back for land line costs, elec/heating (aslong as they are accounted for through reciepts etc) but nothing on rent even if that is accounted for. Seems messed up to me.

I think you misunderstand. The business can claim rent. That is not really an iissue. It is a chargeable expense subject to normal accounting rules.

What is at issue is the impact of the rent received on the recipient. This is going to be chargeable to tax under the approiate regime and if it so happens that the property is a PPR if part of it is let for commercial use this could prejudice the abilty to get the normal CGT relief on a sale.

[Maxamus]

Expenses must be occured wholly by the business. So claiming that the desk in your bedroom is an office is not going to work.

what if its a room which is an office complete with office furniture, computers (laptop, PC and printer), filling cabinets and fax machine.

Thats what im thinking of creating but that means taking up a room downstairs for which she wants rent.

[Pondlife]

In which case ASB's post above is more relevant to you.

[Maxamus]

What is at issue is the impact of the rent received on the recipient. This is going to be chargeable to tax under the approiate regime and if it so happens that the property is a PPR if part of it is let for commercial use this could prejudice the abilty to get the normal CGT relief on a sale.

excuse my ignorance but what is PPR and CGT abbreviated for?

[Sockpuppet]

excuse my ignorance but what is PPR and CGT abbreviated for?

CGT = Capital Gains Tax

PPR = Private Propery Rental (might be not 100 sure on that) could also be Private Persons Residence (i.e. a house not a factory)

[Maxamus]

so pay cash and take the hit

[Ardesco]

Generally speaking it is not worth the hassle of claiming rent for a room in your house. There is an audit trail of money going out of your LTD Co so somebody will have to pay tax on the money they receive (Unless the amount is very small) and IR will tend to take the attitude that you are fiddling your books if you are living at home with your parents and paying rent to them out of your company. They will expect to see proper invoices sent to your company and they will also want to track that the money has gone out of your company and into your mothers bank account. they will also start off assuming that once the money goes into your mothers bank account she is going to hand it back to you and will expect you to prove otherwise. not very fair, but then we are taling about the IR.

This is not really relevant, but the owning a percentage of a house thing is relevant if your company goes down the pan. If your company rents out a room in a house you own and pays a significant proportion of the mortgage and your company goes down the pan the courts can take the view that as the company has been paying x% of the mortgage the company actually has a stake of x% in your house. So if your company owes money to people and cannot pay it they will expect x% of your house to be sold off to pay for these debts.

You really need to talk to somebody who specialises in this area to get all the details but I know I looked at this about 5 years ago and although it is not likely the chance that you could be forced to sell your house if your company goes tits up is not worth the risk in my opinion.

Best advice is for a small amount like £30 a month just take the hit and take an extra £360 out of your company as dividend/wages. It's not worth the hassle of doing anything else especially when there could be repercussions.

[Bluebird]

Couple of Points...

1. I'm fairly new to this so excuse me if I get the wrong end of the stick.

2. As far as Artic Systems are concerned - didn't they get the ruling overturned ? - am I ok to pay myself a salary out of the business and dividends to both myself and wife as we each own 50% of the company shares ?

3. I'm getting a bit confused about expenses - There are two types 1.Expenses you incur as an employee of the company, which the company then re-imburses you for. 2. Expenses that you pay out of the Co Bank which then helps with taxes - is there any one which is better than the other [ i.e. if I buy some software to do my job should I pay cash and claim as employee or pay through the Co?

4. ALL reciepts need to be kept !

5. What sort of things can I pay through the Co bank a/c ? My mobile ? [ providing it's in the company name even though it's mostly personal calls ? ] [ a weekend away in a hotel for me and my wife as part of a "team building exercise" for company shareholders !]

Cheers

[Ardesco]

You can put the mobile through the company, but if it is mainly personal calls you will probably be expected to reimburse your company or it will be a BIK.

You can only claim a hotel if you incurred the cost due to business reasons. So if the company director and the company secretary went away one weekend for business purposes (to promote your company by holding a stall at an EXPO. Required for a meeting to set a contract up between your co and another co, etc) that is fine.

But if you just want a dirty weekend, nope you can't do that. You can also have a board meeting at a restaurant of your choice if you so desire, just don't forget to write up the minutes of the meeting and keep them safe and sound as proof.

[Nixon Williams]

1. I'm fairly new to this so excuse me if I get the wrong end of the stick.

2. As far as Artic Systems are concerned - didn't they get the ruling overturned ? - am I ok to pay myself a salary out of the business and dividends to both myself and wife as we each own 50% of the company shares ?

3. I'm getting a bit confused about expenses - There are two types 1.Expenses you incur as an employee of the company, which the company then re-imburses you for. 2. Expenses that you pay out of the Co Bank which then helps with taxes - is there any one which is better than the other [ i.e. if I buy some software to do my job should I pay cash and claim as employee or pay through the Co?

4. ALL reciepts need to be kept !

5. What sort of things can I pay through the Co bank a/c ? My mobile ? [ providing it's in the company name even though it's mostly personal calls ? ] [ a weekend away in a hotel for me and my wife as part of a "team building exercise" for company shareholders !]

Cheers

The Revenue have taken the Arctic case to the House of Lords and this will be in June - so until that is decided I would recommend that you own 100% of the shares and transfer to your wife if the case goes against the Revenue.

I presume you mean expenses that the client reimburses you for? Your company invoices for these, they are paid to your company and you then claim from your company.

Remember to obtain receipts in the company name whenever possible and submit an expense claim to your company or you may pay direct from the company.

Mobile costs are fine provided that the account is in the name of your company, if it is your personal name you can only claim for business calls.

Weekends away are asking for trouble, you can claim for an annual event (usually at Christmas) and the limit is £150 per head, a penny over and the whole amount is taxable.

I hope this helps.

Alan