Charging limited company rent for home office

Discussion in 'Accounts & Finance' started by shadowfnx, Jan 20, 2012.

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  1. shadowfnx

    shadowfnx UKBF Newcomer Free Member

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    I am a director of a limited company and work exclusively from a home office. Is it possible to change my company rent in this situation? What implications arise from this?

    The room in question is quite sizeable and is only used for business purposes during normal weekday work hours. Ideally I'd like to charge the company approximately £500/month for using it. This money would go toward mortgage repayments, electricity bills and so on.

    Thank you for any advice you could give me.
    Posted: Jan 20, 2012 By: shadowfnx Member since: Jan 7, 2012
  2. David Griffiths

    David Griffiths UKBF Legend Full Member - Verified Business

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    It's quite possible.

    The rent will be a tax deductible expense for the company.

    It will also be a taxable receipt in your hands, to be shown on your self assessment. You can then deduct the relevant proportion of expenses such as interest and other outgoings.

    Beware that if any part of your home is used exclusively for business purposes, you will lose entitlement to the private residence exemption on that part of the home and that might lead to a capital gains tax liability when you sell it
    Posted: Jan 20, 2012 By: David Griffiths Member since: Jun 21, 2008
  3. davek17

    davek17 UKBF Newcomer Full Member

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    Hi There

    I'm a business owner too and used to do this when I worked solely form my home office. Things might have changed but just a heads up on how you must do this because if you charge too much then the Tax man can view your property as mostly commercial and you end up having to pay tax on the sale of it etc etc.

    The trick was you had to proportion all the rent and services correctly against your mortgage, so at the ned of the day I managed to get about £60 through and this includes all utilities and rent on a total mortgage of about £500 per month. It was all rather frustrating really as I was hoping to charge myself £300-400 per month at the going rate but I think the crux was all around the suggestion of the room being kept multi-use (Office in day, family use at night) even if it is a permanent office to keep the tax man happy.

    There was definitley something about this on the HMRC website and I spoke to them directly about it too. You can't just charge out a room based on the going rate, I know that that was a no-no.

    Hope that helps.
    Posted: Jan 20, 2012 By: davek17 Member since: May 14, 2009
  4. elainec100@cheapaccounting

    [email protected] UKBF Newcomer Full Member

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    Posted: Jan 20, 2012 By: [email protected] Member since: Nov 4, 2005
  5. shadowfnx

    shadowfnx UKBF Newcomer Free Member

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    Thanks for the replies everyone, they've been very useful.
    Posted: Jan 20, 2012 By: shadowfnx Member since: Jan 7, 2012
  6. Sky Racer

    Sky Racer UKBF Regular Free Member

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    Last edited: Jan 20, 2012
    Posted: Jan 20, 2012 By: Sky Racer Member since: Dec 27, 2010
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