• Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
  • Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!

Shared expense between limited and sole trader

Collapse
X
  •  
  • Filter
  • Time
  • Show
Clear All
new posts

    #11
    Originally posted by MonkeyDonkey View Post
    With the rent, I assume I can just figure out a percentage and accordingly split per legal entity and contract.
    If you were thinking about doing it through the rent a room scheme as well... You can't.

    https://www.gov.uk/hmrc-internal-man...manual/pim4002

    Extract from TBK12


    “There have been some suggestions in the professional press that relief could be available where a residence, or part of a residence, is used as an office or for other trade or business purposes (other than the business of providing furnished living accommodation) and sums are paid in respect of that use. We take the view that such claims are inadmissible since:
    • the words of the legislation, in our opinion, do not permit such claims, and
    • the legislation was never intended to give relief in such circumstances.

    Where a room is used exclusively as an office or as other trade or business premises, it is no longer occupied or intended to be occupied as a separate residence - one of the conditions for rent-a-room relief. As such, it is no longer, for rent-a-room purposes, part of the ‘residence’ because F2A92/SCH10/PARA7 permits the identification of parts of buildings which are occupied or intended to be occupied as a residence.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

    Comment


      #12
      As an accountant this is one of the few areas where if I am across the table from a potential client and this is the kind of stuff they say then it’s better to pass on it and file in the ‘life’s too short’ folder.

      This most certainly is one of the areas where a person thinks they have a great idea but don’t actually follow through. I personally find a sole trader wanting to do this as ridiculous. As NLUK points out, this is not eligible for rent a room relief, and therefore goes onto the SATR as income. Reducing trading profit in one part of the SATR to increase rental income in another is pointless. Sure the two are in different parts of the SATR but what is the material advantage of doing this?

      For the Limited company, you reduce your distributable reserves by the amount of the rent, your corporation tax liability by rent x corporation rate and increase your SATR by the amount of the rent. It’s worth considering this as we have various tax rates in play and what a person might think is clever might actually be detrimental.

      My views on this are usually not taken well but IMO HMRC have an allowance for working from home. Other than workspace and permissible equipment specifically listed by HMRC, I don’t personally believe that stuff like hoovers, heaters etc are not permissible as they aren’t wholly and exclusively for business as they are in a person’s residence. However, again I file this in the ‘life’s too short’ folder, outside of my own clients I don’t really pay too much attention to this kind of thing.

      Comment


        #13
        The rules for claiming use of home expenses for the self employed are more generous than those for employees so I would claim expenses for that against your sole trader business - employees can only claim £4/week or additional costs (with evidence) whereas sole traders can work out a reasonable proportion of their household costs according to the number of rooms and percentage of time using the room for business.

        (Directors/employees can achieve a similar saving by going down the renting to your company route but why go through that faff when you don’t need to?).

        Comment


          #14
          Originally posted by TheCyclingProgrammer View Post
          employees can only claim £4/week or additional costs (with evidence) whereas sole traders can work out a reasonable proportion of their household costs according to the number of rooms and percentage of time using the room for business.
          £6 a week from April 2020 isn't it?
          'CUK forum personality of 2011 - Winner - Yes really!!!!

          Comment


            #15
            Originally posted by TheCyclingProgrammer View Post
            £4/week
            That was boosted to a spectacular £6/week in 2020-21, woohooo.

            ( OP is having a laugh. )

            Comment


              #16
              Originally posted by jamesbrown View Post
              ( OP is having a laugh. )
              Hate to think what else he's claimed up to now. I'd guess the coffee cup he's drinking out of right now is part owned by his LTD/Sole trader setups as well.
              'CUK forum personality of 2011 - Winner - Yes really!!!!

              Comment


                #17
                Originally posted by northernladuk View Post

                £6 a week from April 2020 isn't it?
                Yes, indeed.

                Comment

                Working...
                X