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I have a client who operates through a limited company.

An opportunity has arisen which would allow him to purchase a double garage near his house (his house is also is office). One of the gagrages will be used to store his persoanl car and the other used for storage (mixture of personal and company items)

Appreciate any comments concerning the benefit in kind charges that might apply. Garages are likly to cost £45,000


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04th Dec 2012 10:46

It's an asset

The benefit in kind is 20% of market value when first provided, plus any additional expense connected with making the asset available (eg electricity charges), by virtue of S.205 ITEPA 2003.

To the extent that the asset is then used for business purposes, a deduction can then be claimed as if an expense has been incurred of that proportion of the benefit, under S.365 ITEPA 2003.

Class 1A NIC though will be calculated on the gross benefit, without the S.365 deduction, unless the S.365 deduction fully extinguishes any benefit (after also deducting any contribution by the director).

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04th Dec 2012 12:24

Market rent?

You could get his limited company to charge him a market rent for use of the garages.

Perhaps this is equivalent to the rent that he charges the company to use his home as an office?

Will avoid the need to report a BIK.


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