Originally posted by chrisl
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Your company can rent the office from yourself at a market rate. This is an expense from your company. Assuming you can reasonably accurately detect how much electricity etc is used by the office these are all claimable. As is insurance council tax etc. Basically everything to do with running it. However when you get into apportionment of joint costs (e.g house insurance t can get very difficult to justify these - but your accountant will be available to advise.
Of course you need to take a view about business rates if there is sole use of the office for business. If you are a fairly typical contractor then this probably won't apply - but you will need to discuss your usage with your authority in order to ascertain how they view it. Business rate get very expensive very quickly.
However, the rent is of course taxable income in the hands of the recipient. You might take the view that up to 4k a year it is covered by the rent-a-room scheme. This would be unwise. [Of course this doesn't really help you, you are simply saving CT on the rent in order to pay personal income tax which may well be higher]
Now, if you want to get creative (the chances of this being cost effective in the long term are probably nil) - you will need to have a very detailed chat with your accountant. You could investigate:-
- You personally sell a lease on the ground it stands on to your company. You need to account from this income on your SA return. Also the ongoing ground rent.
- Your company builds the building. This is then treated as any other building project. The VAT may or may not be reclaimable depending upon the normal rules. You'll need to look 'em up on HMRC web site.
- You depreciate the building in accordance with whatever accounting policy you put in place. The tax treatment of that is dependant upon statute of course.
There are some issues here of course. The building has an independent value. Part of that will be governed by the lease conditions. The notional value of the building at the end of the lease is of course nil since it reverts to you. This is not likely to impress HMIT if you grant a short lease (or probably even a long one in fact).
In the event of the sale of your property you have devalued it, your co has the right to continue it's usage. You could get round this by careful drafting of the lease.
The chances are the you will have a hard job finding any arrangements which HMIT won't simply look through, but you never know. Your exact circumstances might allow it.
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