Costs of flat allowable for corp tax?

Company pays for flat for director who lives in Birmingham

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A new client has been paying for rental costs for the flat of a director who currently lives in Birmingham, and has been for several years. The office however is in Essex, so the company is paying for the flat so that the director can stay close the office during the week, and he goes home to Birmingham at the weekend.

Is this allowable for corporation tax? I suspect not, seeing as the office is his permanent workplace but I can't seem to find something that relates to accommodation where an employee already has a home. Can anyone point me in the right direction?

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By mrme89
16th Mar 2018 16:04

It's allowable for CT. You also need to look at the accommodation benefit.

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By KevinMcC
16th Mar 2018 16:09

I don't think corporation tax is the issue here - you should be able to get a deduction no problem.

What it looks like you have though is a benefit in kind issue for the director - the company is providing him with living accommodation.

Have a read at ITEPA 2003 Chapter 5.

The accommodation might qualify for an exception, but on he information provided I think that'd be unlikely.

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By SkyBlue22
16th Mar 2018 16:23

Thanks, I already knew it was probably a BIK, just wasn't sure how allowable for CT.

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paddle steamer
By DJKL
16th Mar 2018 16:23

Also, whose name is on the lease, the company or the director? If the company a BIK is on point. Not so sure if company is merely reimbursing a director's personal cost, perhaps it should go through payroll.

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By WhichTyler
16th Mar 2018 16:27

Providing accommodation so that someone doesn't have to live in Birmingham may be seen as charitable expenditure.

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By Portia Nina Levin
16th Mar 2018 16:31

What was the cost of the flat? And if it was purchased before 1 April 2017, what was it worth then?

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Replying to Portia Nina Levin:
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By SkyBlue22
16th Mar 2018 16:33

Not purchased, it is being rented from a third party; the company is paying the costs. At this point I don't know whose name the lease is in.

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By Portia Nina Levin
16th Mar 2018 16:38

Yes. I failed to read the question properly.

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RLI
By lionofludesch
16th Mar 2018 17:32

You won't find anything about "accommodation where an employee already has a home". It doesn't matter whether the flat is a first home, second home or fifty seventh home - it's accommodation and potentially (at least) taxable as a benefit in kind.

Did we get told whether the lease was with the company or the director personally ? If we did, I missed that.

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Replying to lionofludesch:
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By atleastisoundknowledgable...
17th Mar 2018 11:08

Not yet we didn’t

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Replying to atleastisoundknowledgable...:
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By lionofludesch
17th Mar 2018 11:52

Ach, well - it's probably not important.

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