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company director home office expenses

how to account and claim flat rates home office expenses for company directors

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I have a separate small limited company with 2 company directors (husband and wife) where the company has very simple tax affars and the directors dont draw any salary or dividends at all from this. (this ltd is separate from our usual PAYE employee working for major industry where we complete self assessment personal tax return.)    Because of this we have not relied on an accountant to prepare our first set of annual accounts and CT600 as we think we can do it this time given our simple affairs (but we will hire an accountant over the next couple of years for future returns/accounts etc.)   

Question how do you claim for £4/week flat rate expenses for company directors when they use their home as office part of the week if you dont receive any salary from the company? 

 Is it one claim per company or can you do two claims each of £4 per week for married couple who are both company directors?

Is it mentioned as a expense on the cost of sales and  just taken off the corporation tax bill or do you put it as a tax deductible or disallowed allowance even though no payment leaves the company bank account? 

Or if the company directors dont get a salary from the company, do you claim tax relief from hmrc self assessment?  

I have to submit accounts soon but covid lockdown has made it difficult to find someone to discuss!  I hope you can show pity on me and advise please?

thanks

David

Replies (18)

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By Not Anonymous
20th Feb 2021 13:24

If they don't receive any taxable earnings from this company what relief do you think they would be able to obtain through a Self Assessment return?

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By jdajames
20th Feb 2021 13:30

i assumed that if LTD company does not pay the company director for the use of home office expenses at simplified rate of £4 per week, then the company director can claim from hmrc as tax relief from their self assessment?

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Replying to jdajames:
RLI
By lionofludesch
20th Feb 2021 13:52

jdajames wrote:

i assumed that if LTD company does not pay the company director for the use of home office expenses at simplified rate of £4 per week, then the company director can claim from hmrc as tax relief from their self assessment?

You can't claim back more tax than you paid. If you've paid no tax, HMRC won't send you any back.

Maybe you should think again about that accountant.

Thanks (3)
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By jdajames
20th Feb 2021 14:05

Thanks

But can i ask if how company directors working from home (some of the time for doing admin, accounts and business related work in evenings and weekends) who dont draw a salary but participate in the company generating sales revenue would get compensation for home office expenses then? Or put differently, how would the company allow director expenses for home to be used as office if they dont pay any salary to them and hmrc say companies can claim £4 per week (but £6 per week from april 2020)?
Thanks

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Replying to jdajames:
By williams lester accountants
20th Feb 2021 14:10

This is the sort of question your accountant could answer......if you had one.

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Replying to jdajames:
RLI
By lionofludesch
20th Feb 2021 14:14

jdajames wrote:
......... hmrc say companies can claim £4 per week (but £6 per week from april 2020)?
Thanks

They can claim it. It just doesn't alter their tax liability, which stays at zero.

What was the rationale behind not paying a salary ? Didn't want to bother with all this RTI nonsense ?

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By Hugo Fair
20th Feb 2021 14:14

Really just re-enforcing previous comments ...
"Question: how do you claim for £4/week flat rate expenses for company directors when they use their home as office part of the week"
Answer: there's nothing to stop any expenses being claimed from the COMPANY (although tax treatment will depend on the W&E relevance to the company) ... but there is no concept of claiming expenses from HMRC.

What you can do is to claim tax relief from HMRC, which is a means of increasing the amount of your earnings not subjected to tax. In other words you don't get money from HMRC, you just don't pay them as much as you would otherwise have had to do.

As others have said, appointing an accountant would be a smart move before you make any other wholly incorrect assumptions.

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By Paul Crowley
20th Feb 2021 16:17

Accountants just love picking up a DIY

Ever need to a hairdresser to fix the cut you did yourself?

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Replying to Paul Crowley:
Hallerud at Easter
By DJKL
20th Feb 2021 18:09

I will have to post Covid, I just hacked at my hair with a pair of scissors a few weeks back when it was getting too long, mind you it always sprouted in strange directions so now it is merely less symmetrical.

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By Paul Crowley
20th Feb 2021 16:19

BTW
You are wittering about a maximum of £83.20

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Replying to Paul Crowley:
RLI
By lionofludesch
20th Feb 2021 16:23

Paul Crowley wrote:

BTW
You are wittering about a maximum of £83.20

£93.60. But more probably £41.60.

Thanks (1)
JCACE
By jcace
20th Feb 2021 19:08

As long as the company requires the directors to work at home, the easiest way to deal with this would be for the company to pay the directors at the flat rate. It will be tax-free for the directors, but a deductible expense for the company.

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Replying to jcace:
RLI
By lionofludesch
20th Feb 2021 19:25

jcace wrote:

As long as the company requires the directors to work at home, the easiest way to deal with this would be for the company to pay the directors at the flat rate. It will be tax-free for the directors, but a deductible expense for the company.


For the future, obviously.
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Replying to jcace:
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By jdajames
20th Feb 2021 20:55

Also, we dont take any salary or dividend (this is our first year) and we were trying to reduce our taxable income from our other employment and effect on pensions tax etc. But if this a deductable expense and if we are not getting a salary, where would the company account show where this expense goes? - is it some sort of deferred payment or enterd credited into a director loan accout (if DLA, is that for each director)?
thanks

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Replying to jcace:
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By jdajames
20th Feb 2021 20:55

Also, we dont take any salary or dividend (this is our first year) and we were trying to reduce our taxable income from our other employment and effect on pensions tax etc. But if this a deductable expense and if we are not getting a salary, where would the company account show where this expense goes? - is it some sort of deferred payment or enterd credited into a director loan accout (if DLA, is that for each director)?
thanks

Thanks (0)
Replying to jdajames:
JCACE
By jcace
20th Feb 2021 21:08

The expense will be reflected as a debit in the appropriate P&L account (eg directors'
home working costs) and either credited to the DLA (if not paid) or bank account if paid.

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Replying to jdajames:
JCACE
By jcace
20th Feb 2021 21:13

.

Thanks (1)
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By RetiredTax
21st Feb 2021 17:38

I might be being a bit Sunday p.m. drowsy but -- (& I haven't checked the specifics of the WFH rules ) IF the Dir. is not being paid ANY emoluments from THIS employment is there any claim for relief against his income to be had? (as opposed to the Co'y "reimbursing" to him the sums). I seem to recall that any claim had to be " incurred and defrayed from THE (my emphasis) emoluments therefrom". Does S328 & S329 ITEPA restrict/prevent any such claim in these circumstances? See EIM31655 et seq.

I hope this helps

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