Drector renting room to company

Drector renting room to company

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A director is planning to rent a room in his house to the company of which he is a director. He intends to use this room solely for company business and intends to charge a rent a little higher than the house costs apportioned to the room, including use of telephone/internet. He will declare the income as property income with an appropriate deduction for those costs. The company rents its main premises elsewhere. Should this be shown on a P11D? Might HMRC challenge this arrangement? If he used the room partly for private use would that eliminate any CGT problem in the future without any other likely consequences?

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By mhtax
11th Mar 2014 20:08

Market Rent

Research the rental charges for serviced offices in his area. You must be able to show the maximum rent as appropriate for the facilities. If he then chooses to charge less he has made a commercial decision to help his business but he must not charge more even if that is a little higher than the property costs.

This is not a P11d issue unless he is taking more than market value.

Technically, 100% business use does change the CGT status but it is then capable of roll over relief if he moves.

 

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By ted.henderson
12th Mar 2014 14:21

Thankyou.

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By justsotax
12th Mar 2014 14:38

any reason

why he wants to charge more than the apportioned costs?

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By Steve Kesby
12th Mar 2014 14:42

@ justsotax

Perhaps to use his personal allowance and effectively pass more of it to the company without paying NIC on salary?

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By justsotax
12th Mar 2014 15:31

I guess so...

although the implication is that we are talking about minimal amounts...but I guess whatever the clients wants...

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