Home For accounting professionals General accounting discussion
Current updates regarding coronavirus (Covid-19) and the precautions AAT are taking will be continually updated on the below page.

Please check this link for the latest updates:
We hope you are all safe and well and if you need us we will be here. 💚

Costs relating to flat above shop accessible only through shop

Assistance please : I have a new client who lives in the flat above a shop he rents, access to the flat is only through the shop, the flat has to be rented with the shop due to the access. If the flat is kept empty then 100% tax deductible expense I'm sure but what about the tenant of the shop living in the flat ? Seems unfair that if he chooses to live in the flat it then the flat proportion of costs becomes an unallowable expense as he has to rent the flat as part of the shop lease but I can see the logic for the tax man too. Help....


  • NeillawNeillaw New Member RossendaleMAAT, AAT Licensed Accountant Posts: 265
    Little bit confused as to who will be living in the flat.
    I don't think it's unfair for the tenant living in the flat to disallow the expenses, if the person just uses it as business premises then ok.
    If the revenue was to let this go every sole trader/small company will be converting their house to take into account tax benefits.
  • jonleejonlee Registered Posts: 4
    Thank you Neillaw, as I thought but sometimes you just want to hear someone confirm your understanding before I discuss the bad news with a client.
  • SdaeblanaSdaeblana Registered Posts: 6
    There might be a possibility of the entire rent being tax deductible. But you don't provide enough information in your post to be able to answer your question.
  • jonleejonlee Registered Posts: 4
    Thanks, but what info do you need ? The rent invoice is for one figure,it does not specify the flat, this is a partnership with the partners living in the flat, access is through shop, council tax is charged on the flat. Intreaged if you think there's circumstances where this is alowable.
  • SdaeblanaSdaeblana Registered Posts: 6
    You never mentioned what the entity was. We now know we are talking about a partnership.

    Had it been a limited company, the rent would have been fully deductible, but an accommodation benefit would have arose.

    As it is a partnership, the private use element will have to be adjusted for. You may also have adjust for other costs such electricity.
  • jonleejonlee Registered Posts: 4
    Thanks Sdaeblana
Sign In or Register to comment.