Advice on paying rent whilst on a contract away from business address

[alfatech]

Hi

Quick question I will shortly be on a short-term contract living away from home. My home is my business address. I will be living in rented accommodation during weekdays only. Can i pay for the rent directly through my limited company bank account? or do I have to pay for it through my own pocket and then claim it back as a business expense from my company? All my contracts have been local so far so iv been commuting from home so im not too sure how to do this.

Thanks in advance

[Clare@InTouch]

If you need to incur the cost in order to carry out the contract then paying for it direct from the business account is absolutely fine. In fact it's probably preferable as it provides more of an audit trail should HMRC ever look into your records.

[FiveTimes]

It is fine to pay it out of the business account.

If its a rental room with the owner, buy a receipt book and get them to fill it in every time you pay the rent. Just another bit of audit trail.

[ASB]

Hi

Quick question I will shortly be on a short-term contract living away from home. My home is my business address. I will be living in rented accommodation during weekdays only. Can i pay for the rent directly through my limited company bank account? or do I have to pay for it through my own pocket and then claim it back as a business expense from my company? All my contracts have been local so far so iv been commuting from home so im not too sure how to do this.

Thanks in advance

Make sure you get the right sort of tenancy. If you are the tenant then it should be an AST which should have a minimum term of 6 months. If it's let to the company then different rules apply.

Information Sheets | ARLA

In the case of the company let there may be vat complications (it could potentially need vat charging). A thread to get you started.

Tax Tips Forum :: Free Tax Advice • VAT on rent : General

The VAT should be netral in that it should be reclaimable, but not if you are on the FRS.

Ultimately you should be able to expense the rent but if the family come to star or whatever you may wish to consider the potential BIK.

[BolshieBastard]

Get it in your company's name. Even if you dont, there's no problem.

I did this a couple of times when working away for a couple of years. Beats hotels any day of the week.

[ribble]

I'm currently paying rent (£600 / month) to a private landlord from my company as an expense for living in London during the week.

I have just spoken to my accountant regarding my P11d who is saying that my rental need to be declared and I will need to pay a BIK on the amount as it is a benefit to me provided by the company. I didn't think that this would be the case and would be treated just like a hotel.

Can anybody shed any light?

[Clare@InTouch]

I'm currently paying rent (£600 / month) to a private landlord from my company as an expense for living in London during the week.

I have just spoken to my accountant regarding my P11d who is saying that my rental need to be declared and I will need to pay a BIK on the amount as it is a benefit to me provided by the company. I didn't think that this would be the case and would be treat like a hotel.

Can anybody shed any light?

Is it a second home, rented purely for business reasons? You have a principle residence elsewhere? No private element to the London residence at all? It's a temporary workplace? If yes to all, then I'd question why it's a benefit in kind on the basis of the accommodation being necessary for you to do the job. From HMRC:

Accommodation you can provide free of tax and NICs

If any of the following conditions apply to accommodation you provide to an employee, then you don’t have to report the benefit or pay tax or NICs on it:

the living accommodation is provided because of a domestic or personal relationship rather than an employment one - for example, if your son or daughter works for your business
the accommodation is provided by a local authority on the same terms that housing is provided to non-employees

it's necessary for the employee to live there to be able to do their work properly - for example, agricultural workers living on farms and full-time caretakers who are on call outside normal working hours

it's customary to provide accommodation so the employee can do their work better - for example, ministers of religion, members of the armed forces and pub managers living on the premises
there's a special threat to the employee's security and they have to live in the provided accommodation as part of arrangements for their personal security

HM Revenue & Customs: Living accommodation

[ribble]

Is it a second home, rented purely for business reasons? You have a principle residence elsewhere? No private element to the London residence at all? It's a temporary workplace? If yes to all, then I'd question why it's a benefit in kind on the basis of the accommodation being necessary for you to do the job. From HMRC:

Accommodation you can provide free of tax and NICs

If any of the following conditions apply to accommodation you provide to an employee, then you don’t have to report the benefit or pay tax or NICs on it:

the living accommodation is provided because of a domestic or personal relationship rather than an employment one - for example, if your son or daughter works for your business
the accommodation is provided by a local authority on the same terms that housing is provided to non-employees

it's necessary for the employee to live there to be able to do their work properly - for example, agricultural workers living on farms and full-time caretakers who are on call outside normal working hours

it's customary to provide accommodation so the employee can do their work better - for example, ministers of religion, members of the armed forces and pub managers living on the premises
there's a special threat to the employee's security and they have to live in the provided accommodation as part of arrangements for their personal security

HM Revenue & Customs: Living accommodation

It is room that I rent for 4 nights a week rather than staying in a hotel. I am only in London due to working on this contract and accommodation is necessary as my principle residence is in Devon. Definitely a temporary workplace – not hit anywhere near 24 months total in the London area so far.

[Clare@InTouch]

It is room that I rent for 4 nights a week rather than staying in a hotel. I am only in London due to working on this contract and accommodation is necessary as my principle residence is in Devon. Definitely a temporary workplace – not hit anywhere near 24 months total in the London area so far.

Have you questioned your accountant, and mentioned the facts? What did he say?

[ribble]

Just doing that now.... didn't feel quite right but wanted to check my facts first...