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Director claim for second home expenses ?

Director works across a 250m, bought a second home used exclusively for work , what can he claim

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Hi, I hope someone can help since I have read conflicting views.

my client relocated from the midlands to north wales (which is now his primary residence) , he is sole director of his limited company that provides acoustics consultancy across the wales, the a5 corridor and the midlands, most of his work is in the midlands. Upon relocation he bought a second property , a flat in the midlands to support staying away from home and undertaking several days work in the area and reduce travel time. 

Question - Is he allowed to claim all the running costs of the flat plus mortgage interest as a legitimate business expense ?

if yes, is he also allowed to claim mileage to his first site visit from his primary residence and his last site visit to home in the same week.

many thanks for you time.

kind regards

Replies (23)

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By AC71
28th Dec 2020 11:35

Looking at your post history, your "client" is your husband. Please be up front when posting, it encourages people to be helpful.........

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Replying to AC71:
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By Emster
28th Dec 2020 11:57

Thank you , yes this is the case yet, I am however CIMA qualified and the question is still relevant

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the sea otter
By memyself-eye
28th Dec 2020 11:57

If most of your client/husband's work is in the midlands why relocate (or as we say 'move') to Wales unless as a matter of convenience.... and not necessity?

Important word that - necessity.

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By Emster
28th Dec 2020 12:35

Thank you for your response .

There is a decent proportion of work in wales, however the move is a choice , obviously population density is such that work is ( for a diverse range of clients) predominantly spread across the midlands , through to Leicester and occasionally Northampton as a manageable distance .

If he incurred hotel expenses , he would be able to claim. We’re just trying to establish how much if anything can be deducted as a business expense for the flat that is exclusively to support the business .

Kind regards

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By the_drookit_dug
28th Dec 2020 12:47

He should charge the company rent for use of the property. He'll then personally have taxable property income, against which he'll be able to offset the costs relating to the let of the property to the company.

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Replying to the_drookit_dug:
RLI
By lionofludesch
28th Dec 2020 13:49

Agree with the dug.

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Replying to the_drookit_dug:
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By Emster
28th Dec 2020 15:32

Thank you, that is really helpful.. Enjoy your new year

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Replying to Emster:
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By Tax Dragon
29th Dec 2020 08:05

OP, have you thought through the BIK position this idea might create?

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Replying to Tax Dragon:
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By the_drookit_dug
29th Dec 2020 10:31

Indeed. My response was merely to how one can get relief for the property costs.

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Replying to the_drookit_dug:
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By Tax Dragon
29th Dec 2020 11:01

Then you meant to say "could" not "should". (I knew that's what you meant. There's enough confusion about some of the OP's comments - and, to be fair to her, some of the replies too - for me to think she probably didn't realise that's what you meant, hence this intervention.)

They could easily end up increasing their overall tax by implementing your... "helpful", she said... suggestion.

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Replying to Tax Dragon:
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By the_drookit_dug
29th Dec 2020 12:16

Fair point.

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Replying to Tax Dragon:
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By The Dullard
29th Dec 2020 12:42

Have you?

It doesn't matter whether the relocation is by choice. The employee - let's call him an employee, in order to focus our minds on the correct principles - has moved home. Travelling costs (which can include overnight accommodation) incurred for the purposes of the employee's necessary attendance at any place (s 338) are a deductible expense from the employment income (which can include benefits in kind) , unless the journey concerned constitutes ordinary commuting (travel from home to a permanent workplace) or substantially ordinary commuting.

If Dave - I feel sure he's called Dave; he sounds like a Dave - can tick that box in relation to the journeys that necessitate him staying overnight in the Midlands pied a terre, then s 364 negates the living accommodation benefit to the extent that such journeys tick that box. If all such journeys tick the box, then drookit's suggestion works perfectly well. The problem that I foresee is that insufficient accurate information is going to be relayed to the ticker of the box to enable the box to be ticked on a sufficient number of occasions; but hey, that's Dave's choice.

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Replying to The Dullard:
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By Emster
29th Dec 2020 13:24

Thank you for taking the time to respond. Acoustics testing and noise surveys are transactional and rarely involve a visit to any one site twice ( for instance a sound test fails, some remediation work has to be done and a retest commissioned) .

My husband will batch work by region to avoid too much back and forth., so he will spend a few nights away whilst servic8ng, say Dudley, Coventry Leicester and so on

Does that tick the box ?

No he is not called Dave :)

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Replying to The Dullard:
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By Tax Dragon
29th Dec 2020 15:03

Have I?

Same as you, I can list the legislation. Same as you, I can't say for sure whether there'll be a deduction (from the BIK).

You think I was wrong to raise the matter? I disagree.

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By Eighties Kid
28th Dec 2020 14:16

Your husband spends all week away from home and your biggest concern is the tax deductibility?

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Replying to Eighties Kid:
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By Emster
28th Dec 2020 15:36

No that is not my primary concern, my primary concern is the heart attack he had three months ago, due to , in part, financial worries from lack of work through COVID, however I want ensure our tax affairs are straight.

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By Calculatorboy
28th Dec 2020 16:54

It sounds like a sham, controlling director relocates of own choice far away from work , then tries to obtain deductions for purchasing flat nearer work . Its an employees responsibility to get to work.
Clearly open to abuse ,
I'd stick to hotels and b&b , besides the costs are surely less financially stressful than purchasing a property .

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Stepurhan
By stepurhan
28th Dec 2020 17:12

You said you had read conflicting views.

What were those conflicting views? If you have genuinely read conflicting views, it may be there is some factual matter reflected in those conflicting views that could affect the answer.

Unless, like referring to your husband as "client" this is code for "I want to pretend I have looked into this myself, but I haven't really".

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By Emster
28th Dec 2020 17:40

My word, some people are quite unkind on this forum, I have read on this actual site conflicting views that seem to hinge on whether or not you are a contractor, which is why I thought I would consult the experts. My line of accountancy is forward corporate modelling for a bank and this is not my area. I am on the whole astounded by some of the unkind and sarcastic responses.

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Replying to Emster:
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By AC71
28th Dec 2020 17:47

See first reply

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Replying to Emster:
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By Paul Crowley
28th Dec 2020 18:49

But none of us pretend to be in practice, discussing a 'client' when that is not the case
There is a lot more expectation of accuracy and research from a trading accountant than from others
More important is that most others miss things that a trading accountant generally would not.
Always best not to mislead on this specific forum

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Replying to Emster:
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By Youareatit
29th Dec 2020 10:13

Emster wrote:

My word, some people are quite unkind on this forum, I have read on this actual site conflicting views that seem to hinge on whether or not you are a contractor, which is why I thought I would consult the experts. My line of accountancy is forward corporate modelling for a bank and this is not my area. I am on the whole astounded by some of the unkind and sarcastic responses.

Hang on Emster.
You were the one outed as being a lair, yet to try to claim the moral high ground?!

You say you are CIMA qualified yet your research consists of wandering around Aweb looking for answers, rather than looking at tax law.

You also say that this is not your area of Accountancy but then also indicate that you actually do have clients, other than your hubby, so it sounds like you are working against their ethics and other policies.

You claim this flat has no personal use whatsoever, yet you bought it without taking any tax advice?! Typical client behaviour and one which someone who is an Accountant would know better about, never mind one who does forward modelling.

As AC71 said right at the outset, be honest. You would get more helpful responses. You are probably costing your husband dearly.

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Replying to Emster:
Stepurhan
By stepurhan
29th Dec 2020 10:32

Emster wrote:

My word, some people are quite unkind on this forum, I have read on this actual site conflicting views that seem to hinge on whether or not you are a contractor, which is why I thought I would consult the experts. My line of accountancy is forward corporate modelling for a bank and this is not my area. I am on the whole astounded by some of the unkind and sarcastic responses.

Again, what conflicting views? "seem to hinge on whether or not you are a contractor" is not an explanation.

If you want people to be kinder, you need to consider your own actions first. You falsely represented this as being a query about a client, not your husband. You mention conflicting views, but give no information on what you mean by this. You claim to have financial worries, yet you have BOUGHT (not rented) a second property.

Respect is to be earned, not demanded.

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