Can a Ltd Co pay to have a storage unit built?

Fitz
Fitz Registered Posts: 26 Regular contributor ⭐
in General accounting discussion
My client is a Limited Company. They currently rent a storage unit. However, they have planning permission to build a large garage at their home address. I therefore have two questions - could my clients rent their garage to their Limited Company for storage? Could the Limited Company pay for the construction of the garage/ storage unit ?

Comments

  • Anne Boleyn
    Anne Boleyn Registered Posts: 196 Dedicated contributor 🦉
    Hi Fitz, When you say "they have planning permission to build a large garage at their home address", I assume you are now talking about the Directors. At the moment the Company will get a tax deduction for renting the storage area but the company won't be able to get a deduction for the building of a garage. Also I believe the Directors, if this is their home, will have received a benefit ie the value of their home rising because it now has a garage. I'm not an expert, so hopefully more knowledgeable colleagues will post.
  • burg
    burg Registered, Moderator Posts: 1,441 mod
    The problem with the company paying for the garage to be built is then that the company technically owns part of the home. It is far simpler and less messy for the directors to have the garage built and then rent part of that garage to the ltd co. Don't forget though that this will need to be shown as rental income in the personal TR.
    Regards,

    Burg
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
    burg wrote: »
    The problem with the company paying for the garage to be built is then that the company technically owns part of the home. It is far simpler and less messy for the directors to have the garage built and then rent part of that garage to the ltd co. Don't forget though that this will need to be shown as rental income in the personal TR.
    This. The cost of building it can't go through the busines (or rather, it creates more problems than desired!) but yes, rental income with a formal contract between directors and company would be fine.

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