I have a client who rents out part of his home to his company, calculated using bills and mortgage interest, divided by the number of rooms. I can't seem to find the definitive answer on how to treat this on his personal tax return.
Rent is being received so that's straight forward, but should he claim the expense of providing the office, i.e. the calculation previously used, so no actual profit or loss from this. If not, can he then claim the rent a room relief? Or does it even need to be disclosed on the SA form?
Any suggestions will be greatly appreciated
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Yes, it needs disclosing, no he can't claim rent a room relief and yes he can offset the rental income with expenses incurred in providing the office space. The expenses have to be reasonable though
In HMRC's opinion, Rent A Room Relief is not available in these circumstances.
PPR relief may need reviewing to avoid its loss.