Limited Company Accommodation Rental

Limited Company Rents 3 bed apartment, and then sub-rents each room to an employee at agreed rate.

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If the Company rents the entire 3 bedroom apartment for £900 per month all in (including rates, utilities and internet) and then sub-lets one room each to two permanent employees (one also being a Company Director) for £300 per room per month, with the remaining room being used for temporary employees working at the same location on an irregular basis. What would be the taxation implications? As the employees are paying the going rate for their room is it more straight forward?

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By Accountant A
01st Jul 2018 16:41

Does the landlord consent to subletting and, if so, has the apartment been registered as a HMO with the relevant authorities?

Is £300 the actual market rate or just £900 divided by 3?

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Replying to Accountant A:
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By foxyaero
01st Jul 2018 17:29

Landlord consents and the apartment is registered as a HMO.

The £300 is just £900 divided by the 3 rooms. Is there a better way to come up with this figure?

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Replying to Accountant A:
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By foxyaero
01st Jul 2018 17:29

Landlord consents and the apartment is registered as a HMO.

The £300 is just £900 divided by the 3 rooms. Is there a better way to come up with this figure?

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By Accountant A
01st Jul 2018 21:04

foxyaero wrote:

... with the remaining room being used for temporary employees working at the same location on an irregular basis.

How irregular is irregular? What happens to the room when it's not being used? On the face of it, the director has the use of it. What is the company getting for its £300pm when the room is not in use?

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Replying to Accountant A:
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By foxyaero
01st Jul 2018 21:37

It will probably be used around 1.5 weeks per month by a temporary employee or mechanic working at the same location. When it’s not used, it’s vacant. But for £300 per month it’s drastically cheaper than the current hotel / Airbnb bills for accommodation.

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Replying to foxyaero:
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By Accountant A
01st Jul 2018 21:50

foxyaero wrote:

... for £300 per month it’s drastically cheaper than the current hotel / Airbnb bills for accommodation.

That isn't the test for tax.

For 2.5 weeks per month, the director and employee have sole occupation so arguably should be paying more than £300 depending, as I say, whether the 3rd room is capable of being used when not temporarily occupied by a temporary employee.

How long is the whole arrangement going to last? Is it for the duration of a particular project, for example?

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By foxyaero
02nd Jul 2018 07:39

The 3rd room can easily be locked when it’s not being used. Or it can easily be turned into an office / planning area as well.

The arrangement will last for the duration of a 3 year contract which will be renewed in August.

I guess the alternative is that I (as director) rent the entire apartment and then rent a room back on an adhoc basis to the company?

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