Hi,
My client is a sole director of her Ltd company and is contracting in Wales (registered office in Scotland). She has decided to rent a property there as it will be cheaper and more convenient than hotels or B&Bs. The flat she is planning to rent is unfurnished so she will have to purchase a bed, couch etc. Can the company purchase these items and will full relief be avaialable? I have not come accross this scenario before and can't find any guidence on whether this would be acceptable.
Many Thanks
MP
Replies (7)
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Dear Mr_Pink,
you can claim everything which is wholly and exclusively for business purposes. If property is rented by Ltd company you have to take into account private use by sole director. If she is planning to buy bed/couch it sounds rather for living not working/business purposes. I would suggest rent privately by director and then rent to Ltd without claiming furniture costs.
The company can purchase the furniture, of which it will be making the assets available to the employee (director) which will mean a benefit in kind will arise on the employee and Class 1A NIC's payable. The same will go for the rent payments in all likelihood.
The only exception is if the accommodation provided meets one of the exemptions here - https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim11331
But even so, the furniture provided will still trigger a benefit in kind on the employee in some circumstances.
The only exception is if the accommodation provided meets one of the exemptions here - https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim11331
But even so, the furniture provided will still trigger a benefit in kind on the employee in some circumstances.
You are overlooking s364 ITEPA, which basically means s338 can apply to reduce the accommodation benefit. Whether it does or not cannotbe determined.