Contractor and property

[northernladuk]

Forgot to add... to do this properly you need to draw a tenancy agreement up and do it all as you would a tenant. Secure bond, notice periods, the whole nine yards. This is going to cause you a problem when you get another tenant as there is notice period to serve and you can't have two tenants contracted to the same house yadda yadda.... If you decide to fudge the rules for yourself you are giving it to a plate to HMRC. You have to do this one super squeeky clean if at all.

[northernladuk]

I understand all you are saying but in my case there is no tenant currently so I decided to move in during the week , saving 2 hours 40 a day commute. This way I can run my business more efficiently being 15 minutes away by foot. But for HRMC I moved to reduce the commute no because i dont have tenant in my buy to let. So the company should be charge the rent ( market rate estimate from previous tenancy ) up to mortgage interest. Does it sound sensible ? To be honest I am trying to create expense for my company i already withdraw the maximum within 20% tax band for the tax year.

I presume you are still looking for a tenant? In my mind this is what the HMRC will be happy to come and have a look at. You either need it and use it or you don't. By flitting in and out between tenants is going to make it look more like you are using it for a tax advantage and not for a genuine business need. That is what HMRC will love.

Remember by MAKING an expense you could be falling foul of tax avoidance rules. Creating an artificial arrangement to avoid tax is avoidance in their eyes.

I my honest opinion you should walk away from this. Keep your business out of your personal life for this one.

.... but as ever I am sure this is not what you want to hear.

[olinomura]

NLUK has got to the heart of the matter here: do not confuse yourself as landlord, with yourself as tenant and employee.

The second of those (or your company) can claim expenses against tax, but it is the former that will suffer the costs of having a mortgage but no tenant.

Those costs are therefore not claimable directly as expenses of the contract.

I understand all you are saying but in my case there is no tenant currently so I decided to move in during the week , saving 2 hours 40 a day commute. This way I can run my business more efficiently being 15 minutes away by foot. But for HRMC I moved to reduce the commute no because i dont have tenant in my buy to let. So the company should be charge the rent ( market rate estimate from previous tenancy ) up to mortgage interest. Does it sound sensible ? To be honest I am trying to create expense for my company i already withdraw the maximum within 20% tax band for the tax year.

[Ignis Fatuus]

You have to apply a bit of basic thinking, particularly if you are going fly so close to the wind.

There are a number of factors, the house personally owned by you, your business which is a separate entity and you as a tenant and as the landlord. Just see it as a business transaction. How on earth do you think you can claim rent loss or mortgage payments in that scenario?

NLUK has got to the heart of the matter here: do not confuse yourself as landlord, with yourself as tenant and employee.

The second of those (or your company) can claim expenses against tax, but it is the former that will suffer the costs of having a mortgage but no tenant.

Those costs are therefore not claimable directly as expenses of the contract.

[captainham]

For what is only an 80 minute commute (ok not ideal I admit, but it's on the limits of my own definition of 'acceptable'), plus the fact you wouldn't have any real fee-generating tenants while you're there, I would really question the value of this.

My mantra for the day seems to be "Do you really want to risk incurring the wrath of HMRC", and with something that could be seen as dubious (not saying it is of course), I would really think twice.

But of course talk to your accountant first and see what their verdict is, as I'm definitely no expert but then that was never in doubt!

[northernladuk]

I am back to my main residence every weekend ( where my wife and kids live) . Do I claim the rent loss or the mortgage payment ( which is repayment) or only interest. Can I claim service charge?

Many thanks for your input much appreciated

You have to apply a bit of basic thinking, particularly if you are going fly so close to the wind.

There are a number of factors, the house personally owned by you, your business which is a separate entity and you as a tenant and as the landlord. Just see it as a business transaction. How on earth do you think you can claim rent loss or mortgage payments in that scenario?

Your business pays you (the landlord) for you (as the tenant to stay there) just as you would a normal tenant. It isn't rocket science. As pointed out though coming out of the business account means it is coming out of your pocket at the end of the day.

You can probably claim electricity and the like.

You need to be very very clear about what you are doing here to avoid trouble. Speak to your accountant.

[Pondlife]

I am back to my main residence every weekend ( where my wife and kids live) . Do I claim the rent loss or the mortgage payment ( which is repayment) or only interest. Can I claim service charge?

Many thanks for your input much appreciated

I would go through this with your accountant as, as mentioned by NLUK, it could be complicated since you own the property and it might not be worthwile. In short, you may be saving the Corp tax on the business expense but having to pay additional income tax as a landlord but without the additional income of a 'real' tennant.

[olinomura]

Would this become your main residence? i.e. would you stay there at weekends as well?

If so, no, you can't claim it as you have to live 'somewhere'

I am back to my main residence every weekend ( where my wife and kids live) . Do I claim the rent loss or the mortgage payment ( which is repayment) or only interest. Can I claim service charge?

Many thanks for your input much appreciated

[northernladuk]

I believe you can charge your LTD rent and claim that as an expense but you will have to be super clean with this. One sniff of a scam and they will be all over you like a rash. Over charging yourself, not being there when you say you are and so on will be like a red rag to a bull.

Remember though it still comes out of your pocket, the only benefit will be a tax saving and a tenant you can trust. I wouldn't kick a tenant out just for this. Have a chat to an accountant and get him to do the numbers for you

TBH an hour 20 is not a long commute.

[Pondlife]

Would this become your main residence? i.e. would you stay there at weekends as well?

If so, no, you can't claim it as you have to live 'somewhere'

[olinomura]

Hi,

I am contracting from January 2012 and very new to this market.

I lived 1hour20 from ( 1 way) from my contracting job.
I do own a buy to let , 15 minutes away form my job and think to move in the buy to let to avoid to spend 2hours.40 commuting everyday.
What are my options I am losing the rental income and need to cover the buy to let mortgage.
Can I claim the mortgage as expense or the loss income?

Many Thanks for your assistance