I'm looking at taking a gig based in Canary Wharf. I have my main home but I'm thinking of buying a flat in Canary Wharf (personally) and renting it to my limited company for the going rate. Because of the mortgage interest payments I don't think I'd end up paying much tax (although I need to work the figures out) but would this be allowed?
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Can My Company Rent a Flat Off Me?
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Ask your accountant, that's what they are paid for. -
Originally posted by norrahe View PostAsk your accountant, that's what they are paid for.Loopy LooComment
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Originally posted by norrahe View PostAsk your accountant, that's what they are paid for.Free advice and opinions - refunds are available if you are not 100% satisfied.Comment
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Originally posted by lje View PostI'm looking at taking a gig based in Canary Wharf. I have my main home but I'm thinking of buying a flat in Canary Wharf (personally) and renting it to my limited company for the going rate. Because of the mortgage interest payments I don't think I'd end up paying much tax (although I need to work the figures out) but would this be allowed?Comment
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Originally posted by Stag Cozier View PostYes it would. As long as you are renting to the company at a commercial rate, it would be a rental cost in the company books (24 month rule withstanding). You'll also have to account for the rental income on your personal tax return on any rental profit you personally make at either 20%, 40% or if you're lucky 50%
Yes a rental cost in ltdco's books, which reduces your corp tax, but also if you live in the flat your ltdco is then providing a benefit in kind to you for using it, regardless of who the ltdco is renting it off.
So there's a potential tax double whammy for you personally there on
(i) rental income received from your ltdco
(ii) flat usage benefit received from your ltdco
I imagine HRMC would take a dim view of this kind of arrangement anyway.Last edited by moorfield; 28 June 2010, 08:16.Comment
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Originally posted by moorfield View PostYes a rental cost in ltdco's books, which reduces your corp tax, but also if you live in the flat your ltdco is then providing a benefit in kind to you for using it, regardless of who the ltdco is renting it off.
So there's a potential tax double whammy for you personally there on
(i) rental income received from your ltdco
(ii) flat usage benefit received from your ltdco
I imagine HRMC would take a dim view of this kind of arrangement anyway.
I also think that the personal tax situation would be OK. I can allow the mortgage interest against the income along with other costs (such as service charge and council tax) before calculating the profit. I can also take 10% of the gross rent off the profit as it will be furnished - that leaves me with only a bit of tax to pay.
The thing that worries me is (as you said) whether HMRC would take a dim view of it.Last edited by lje; 28 June 2010, 10:30.Loopy LooComment
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Originally posted by moorfield View PostYes a rental cost in ltdco's books, which reduces your corp tax, but also if you live in the flat your ltdco is then providing a benefit in kind to you for using it, regardless of who the ltdco is renting it off.
If the rent is charged at a commercial value rate then it is simply a cost to the company and income personally. What you said up top is that "your ltdco is then providing a benefit in kind to you for using it, regardless of who the ltdco is renting it off". This is untrue.
If the ltdco is renting a flat I own to provide accommodation to it's worker and I am unconnected to this ltdco, how can that be a BIK? Apply that to hotel costs, if we took the same principal, you would be saying it is a BIK there too.
Have I misunderstood you altogether?Comment
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Originally posted by Stag Cozier View PostHave I misunderstood you altogether?
This linky may (or may not) help ...
http://www.hmrc.gov.uk/helpsheets/hs202.pdf
Edit: Hotel costs are usually "wholly and exclusively" for business purposes, so exempt. Provision of living accommodation usually isn't, hence the BIK (maybe).Last edited by moorfield; 28 June 2010, 10:46.Comment
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Originally posted by moorfield View PostAs always I should have qualified my reply with "I am not a number bod".
This linky may (or may not) help ...
http://www.hmrc.gov.uk/helpsheets/hs202.pdf
Edit: Hotel costs are usually "wholly and exclusively" for business purposes, so exempt. Provision of living accommodation usually isn't, hence the BIK (maybe).
In the circumstances we're talking about an employee is renting accomodation closer to the temporary place of work, thus allowing him to carry out the work at all. Assuming this is not your only residence and you have a permanent home elsewhere, then the costs would be allowable.
Travel expenses: general: scale of expenditure: accommodation and subsistence: examples
The fact that he is renting from himself does not matter, as long as all transactions are carried out on an arm's length basis.Comment
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