I know it's possible in theory, but has anyone ever set up a non-exclusive rent agreement between a company and a director, either for yourselves or for clients?
I use my home office 5 days a week and it's 1 of 4 rooms in the house, so my thinking was that if I charge a rental of 5/7 x 1/4 x costs, so that I don't make any personal rental profits, that would be ok? The room is not just an office, so there's no CGT issues because the business does not have exclusive use of the room.
The other question is that would I then have to disclose the rent in the accounts as a transaction with directors?
If the above is a daft idea, what is the best way of claiming use of home as a director? I know you can claim £18 per month without question, but the above method works out at about £125pm which is obviously more attractive.
I will make a start......
I think your starting point might be a bit off, or maybe my maths is cracked up as much as the rest of me today (highly likely after the weekend shenaigans!)
Use 1 room out of 4, you cannot claim 1/4 if you are saying that the room isnt used full time.
In fact neither then should you really use the 5/7th calc if you dont want HMRC to dispute it as surely you are not using it as an office 5x 24 hours a day, whichif you were could also throw your use as something else comment out.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
It's these questions which are making me question the whole thing! Can I ask what you claim as use of home in your accounts (assuming you do work from home)?
This might help http://www.companybug.com/home-office-expenses-limited-company/
£18 a month is the rate HMRC allow for employees and Directors. You can claim more but, as the article says, it would need to be justified.
Joanne
In my previous reply I mentioned what Rachel could claim for, based on percentages. The article says Directors can't allow rent, council tax or mortgage interest in their calculation, but my calculation was based on Rachel charging her Company rent then offsetting these costs on self assessment basis, is that allowable?
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Hi both You can claim the actual incremental expenses for working from home. So no fixed costs. Best way is floor space and time apportioned and as said before, not a whole room the whole of the time. This will probably work out at more than the £18.
Or you can charge a rent. But to do so there is a lot more to consider, eg (some, but probably not all considerations):
You need the permission of your mortgage company, landlord and/or council (the reason I asked the Q). Failure to do so could mean you are in breach of the small print which may mean call up of a loan etc (if advising clients need to say this!) or breach of sub letting rules etc
You need to put a licence in place which permits the company use of your home for business purposes (this wording will probably need the acceptance of your mortgage provider etc)
Rent must be at market rate. This needs proof for when/if challenged - so you need to instruct someone to do a valuation - estate agent. Find out how much it costs to rent similar sized office and keep that proof (dated)
You are then gaining rental income so this needs to go on your self assessment rental pages section.
Re the latter of course then you can claim allowable rental expenses, but bear in mind things have changed in the property rental rules allowables from April 17.
The more you can show you have considered it thoroughly and not just jabbed a finger in the air the better.
HTH
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
The rent idea I had read about somewhere, was to charge just enough rent to cover the expenses, so there would be no rental profits personally, but if the rent has to be at market rate (which I'm guessing would be more than £125pm), then that won't work. And there's the mortgage company's permission to consider as well.
So, my choices are £18pm or 1/4 rooms x 48/52 weeks x 40/168 hours x light, heat and water. I think the £18pm works out better then.
I knew the rental thingy must have a catch somewhere, or else everyone would be doing it! It does seem a bit harsh on directors, seeing as sole traders can claim more, but ho hum, nevermind. Rules is rules.
