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BIK for living accomodation

Sole Director/Shareholders

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An unmarried couple are both Directors of a company which trades as a pub/restauraunt (owning 50% each).

They both live in the flat above the pub and I understand that due to their material interest in the company, this cannot be treated as job related accomodation.

I am reviewing their BIK position.

The company rents the whole property, including the flat for £40k per annum and pays for council tax/electricity etc. also.

My understanding is that the taxable BIK for them would be the following:

Rent relating to the flat - this would be a proportion of the £40k, but how is this calculated? split based on floor space of looking at similar properties nearby?

All other costs (water/elec)

However, could an adjustment be made in the accounts for all of the above costs to be posted to their DLA and thus they are treated as employee contributions and would therefore result in a nil BIK.

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By Tax Dragon
22nd Jul 2019 08:45

Although McLaren v Mumford was an unincorporated situation, it might provide useful guidance on apportioning rent and annual rental value.

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