How do you deal with farmhouse expenses for limited company farm businesses? Sole traders and partnerships claim the business element of council tax, water, heating, lighting, rent etc for VAT and income tax but what limited companies do? If the expenses go through the company this triggers a BIK charge for the directors. If the expenses are kept out of the limited company then no BIK but no tax/VAT relief either. Do you keep the farm ownership outside the limited company and let it to the company?
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We have always just treated them as a BIK for the proportion of the house (say 2/3rd) which is not used for business.
You can either go down the BIK route or transfer the non business portion to the directors loan account.
We have done this for years and HMRC have even check the records of one of our clients who does this. Other than questioning whether the apportionment was correct, they were happy
Sorry missed the last bit about ownership.
We normally keep the ownership outside of the company and just claim a portion of the costs, i.e. rates light and heat etc.
There are special rules for farm workers
https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim11342
Interestingly if when the company acquired the farmhouse it cost them less than £75,000, which may well be the case for an old established business, and the company has spent no money on improving it, the BIK for occupying the farmhouse would still be based upon the old gross rateable value which could be very low, perhaps only £150 or less for a modest house - see https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim11432