Use of home as office

Dawny

I have a client who is the director of a small one man band limited company.

His registered address is at his home and one room is used exclusively for his business.

I have been putting through an adjustment for use of home on the accounts based on the apportionment of expenses such as power, but reading around this subject I'm now not so sure if this is correct.

Does anyone have any advice, would it be better for the company to rent the room from the director?

Thanks!

deanshepherd

The company DOES rent the room from the director. You are just calculating it by reference to an apportionment of costs. Make sure it is declared as rental income on the director's tax return (and claim an apportionment of the associated costs). For a belt and braces approach, make sure there is a rental agreement between director and company AND to protect the director's CGT relief on his home make sure the use is NOT exclusively business.

burg

second what dean said

deanshepherd

help4u wrote: »

But if you were only apportioning the true cost incurred for the business, that is over and above what is incurred for the residential element then it does not need to be treated as rental income.

Marginal cost of gas and electric is very difficult to calculate in practice and is unlikely to amount to very much so it is usually well worth going down the rental route.

Anne Boleyn

Rent a room relief

Hi Jay

I don't think that would be allowable,

http://www.hmrc.gov.uk/manuals/pimmanual/PIM4002.htm

Dean

deanshepherd wrote: »

Marginal cost of gas and electric is very difficult to calculate in practice and is unlikely to amount to very much so it is usually well worth going down the rental route.

This route also gives flexibility regards to tax planning.