Costs relating to flat above shop accessible only through shop

jonlee

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....

Neillaw

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.

jonlee

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.

Sdaeblana

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.

jonlee

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.

Sdaeblana

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.

jonlee

Thanks Sdaeblana