I have a ltd company with shareholder funds of about £250k. I intend to slowly wind down the business and I pay myself an £8k salary + £25k divi each year. I expect to trade for the next 10 years and then wind up the business. I am currently a lower rate taxpayer. There are 2 other employees who are family members.
I have an opportunity to purchase a 'lodge' on a campsite in France. It is not moveable and its purpose would be purely as a benefit to employees. This is a owner-only campsite so there is no commercial holiday letting allowed. It is open 8 months of the year and the use of the lodge will be for all employees of the ltd company. Cost of lodge is circa £100k plus £3k per year ground rent.
If my ltd company purchases the lodge there would obviously be no capital allowances and no VAT deduction. Given that the contract with the campsite prohibits sub-letting, I assume that the BIK would be based upon the market rate to rent a 2 bed property in the local area eg around £500 per month.
Am I correct in thinking that..
1) Each employee will pay BIK based on the time spent at the lodge (ESC A91). eg if I spent 4 months out of the possible 8 months it would be 20% of £500 x 4 = £400 per year
2) The ltd company will pay 13.8% NIC of £500 x 8 months = £552 per year
3) The lodge will depreciate (like a caravan) so I am not worried about CGT in the future. It also means I could purchase it back from the company in 10 years' time at an attractive price.
4) I do not intend to sell the business so there are no issues about holding an asset that is a perk for employees.
5) The ground rent and utility costs can be paid for by the ltd company
In my mind this stacks up really well which makes me think that I am missing something fundamental !!
Any advice would be most appreciated.