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Tax & accounting issue

Hi to All

The company paid £100,000 for the refurbishments of one of the shops. The lease of this shop is in the name of the director and he receives the rental income from the company for the use of his premises.

The questions are as follows,

  1. Accounting treatment in the accounts as the company paid for the refurbishments
  2. Tax consequences for the company and the director



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02nd May 2012 12:54

director's property

if the refurbishment was paid out of the company bank account and not via a journal into the company books for accounts purposes: either

a)claim it in the company so there are no overdrawn director loan account tennants improvements/tennants repairs which will be regarded either as repairs or (if improvements) an integral features claim under capital allowance rules.For HMRC record keeping purposes look carefully at the rental/tennancy agrement betwen the director and (presumably) his company.


b)if you posted the costs to the directors account, the director's account could easily be overdrawn hence the need for accounting for the DR(directors loan balance) and paying/recovering S419 tax on the DR balance.

when the DR balance falls the following year you can then recover some of the s419 tax.


You best forget about b) and the director cant claim any of the refurbishments against his capital gains tax costs since they were paid by the company.  

Thanks (1)