Share this content
0
346

Use of property allowance - Charging a Ltd company

Didn't find your answer?

Search AccountingWEB

I have a few clients who work through a limited company from their own homes. 

I am wondering what are the implications, if any, of the client charging their company rent of £1,000 per year? 

The client would not pay income tax on this as it would fall under the £1,000 a year property allowance so would save £190 per year in corporation tax & £70 in dividends tax as they would take £1000 less dividends.

Replies

Please login or register to join the discussion.

avatar
14th Jun 2019 11:11

Doesn't work.

Thanks (2)
14th Jun 2019 11:22

I suppose the main implication is that it's specifically barred by the legislation, which I recommend reading.

Thanks (2)
avatar
By djsteel
to Duggimon
14th Jun 2019 11:26

Thanks, Duggimon, I obviously did some digging before asking this question. Could you be more specific. What legislation bars someone from renting a room to a limited company they also own?

Thanks (0)
avatar
By djsteel
to djsteel
14th Jun 2019 11:30

I also don't mean charge a proportion of the household rent or mortage.
For example if my friend owned a limited company and I rented a room to them for £1,000 per year as an office, this would obviously be a tax deductible expense for the friends limited company. I wouldn't pay tax on the £1,000 as its under the property allowance. what stops a person doing this for their own company?

Thanks (0)
to djsteel
14th Jun 2019 11:41

FA 2017, Sch 3, 783AQ

Thanks (1)
avatar
By djsteel
to Duggimon
14th Jun 2019 11:54

Thank you this!

Thanks (1)
avatar
By pauld
14th Jun 2019 11:22

Do not think your client would be able to claim the property allowance in this scenario.

Thanks (2)
Share this content