Live/Work Property LTD Tax

[rhys244]

Hi,

I live in a rented live work unit that has a clear divide between live area and work area.
The live area is a 1 bedroom with living room.

The office area has sole office equipment in it.

If I wanted to rent this to my limited company I have 2 option.

1 - start a new contract between my limited company and my landlord

2- Rent the office space to my limited company. For the size space I have in the location I am a similar size property would rent for £350pw.

I believe bills etc should be able to be setup in the limited companys name.

As the properties area clearly defined to be live work. What are the tax implications on the property, Would I be able to claim back 100% or just a %

I've had a good look around online for advice and cant quite seem to find a good example which covers my situation.

Any light on this would be great!

Thanks

 

[Billmccallum]

SEE http://www.liveworkhomes.co.uk/content/view/363/293/tax-issues-for-live-work.htm

 

[Truemanbrown]

Basically, the HMRC state that you can make a claim for use of home as office if you HAVE to carry out the substantive duties of employment from home.

The amount you can claim is as follows, the additional costs of running the business from home:-

- gas and electricity.
- metered water costs (not if you have a fixed charge for water rates).
- business phone calls (including dial-up internet access).

You can claim up to £3 per week for these (excluding business phone calls) without having to provide proof to back up your claim.

You need to provide itemised proof for claiming your business phone calls.

 

[rhys244]

Bill

Thanks yes I've read that, it doesnt state what % of rent you can claim.

Truemanbrown

If the tenancy agreement is between the limited company and the landlord, the whole rent will be paid through the business account, but seeing as there is a live area, how would the claim on the coporation tax be affected?

 

[Billmccallum]

Bill

Thanks yes I've read that, it doesnt state what % of rent you can claim.

Truemanbrown

If the tenancy agreement is between the limited company and the landlord, the whole rent will be paid through the business account, but seeing as there is a live area, how would the claim on the coporation tax be affected?

% based on floor space, so if 30% is business use, then 30% of rent and utilities can be claimed

 

[rhys244]

Ok just doing a quick measure around the house.

living spaces is 25sqm and office is 32sqm

So thats about 40% living - 60% office

So if rent including all bills were £1550 a month

I can claim back £930 back for the office usage. This correct?

Now am I better to take the tenancy contract out to a limited company or rent a room out to the company?

Or could I take out a normal tenancy contract and just pay out of the business account?

Which would be a prefered method.

 

[Billmccallum]

Ok just doing a quick measure around the house.

living spaces is 25sqm and office is 32sqm

So thats about 40% living - 60% office

So if rent including all bills were £1550 a month

I can claim back £930 back for the office usage. This correct?

Now am I better to take the tenancy contract out to a limited company or rent a room out to the company?

Or could I take out a normal tenancy contract and just pay out of the business account?

Which would be a prefered method.

I would just invoice the company each money for the appropriate percentage of costs, don't really need a tenancy or lease agreement IMO.

 

[Truemanbrown]

If the company was to take on the lease then the company can claim all of the rent in the accounts and it would be allowable for Corporation Tax purposes.

As for your own personal tax situation, then there is a charge which would have to go on the Form P11D. This charge would be calculated as follows:-

The greater of :

• "annual value" - this is the 1973 gross rating value for England & Wales; or
• the rent paid by the company

Less: Appropriate deduction for business use of property;
Less: Any sums made good by yourself.

You would also be liable to tax on the expense incurred by the company on benefits or facilities connected with the accommodation. Such expenses would include heating, lighting, garden maintenance, domestic or other services, and repairs and decorations.​