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Use of home as an office by company directors

The sole director of a limited company is using a room in his house as an office and wants to claim a proportion of the L&H,council tax and mortgage interest from the company.Under what heading in the P&L is this figure shown?

Are there any BIK implications?
John

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By gbms
29th Apr 2001 23:45

Use of home as office
As far as accounting goes, this can be done as follows:

Debit P/L "Use of Home of Office" or "Admin costs" or similar

Credit balance sheet "Director's Loan A/c"

As the director is recovering costs incurred from the company, this does have to be reported on form P11D, but a s 198 claim can be made on the self assessment tax return.

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By admin
25th Apr 2001 21:35

There are benefit implications
Yes there are BIK implications. The amount must be reported on form P11D. The employee (ie director) may be able to claim some of the costs if he or she can show that the costs are incurred wholly, exclusively and necessarily in the performance of the duties of the employment. if the director has an office at work, the office at home will be a convenience and not a requirement of the job. Therefore, any proportion of the costs of the upkeep of the house are unlikely to be allowed. However, the additional costs of working from home should be allowed. How you calculate how much aditional electricity etc is caused by working from home is likely to be difficult but an agreement could be reached with HMIT.

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