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Using the £1,000 property income allowance

Rents charged to company within the allowance

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Hi all,

Apologies if this has been asked before.

My client director shareholder of a Ltd company has a non exclusive licence agreement for use of home office - the house is jointly owned by her spouse. Can they charge the company up to £2,000 per annum without any extra tax and reporting requirement?

Let's say the expenses (apportionned) are roughly covered by this amount, at best it would save time in doing the actual computations.

If the expenses are less but the amount is deemed reasonable (commercial rate) it wouldnt affect deductibility for CT and still no extra tax is incurred for the director and her spouse. 

Is this correct?

Edit: forgot to mention it would apply from 2017-18


Replies (6)

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By Accountant A
10th Mar 2017 15:56

Presumably the detail will be in the Finance Bill 2017.

I'm guessing it'll work for 2017/18 until the geniuses who work at the Treasury realise everyone's doing it and then they'll stop it from 2018/19.

Thanks (1)
By ireallyshouldknowthisbut
10th Mar 2017 16:18

Will people shush?

The treasury reads this to find out how tax works!

Thanks (1)
Replying to ireallyshouldknowthisbut:
By Chipette
10th Mar 2017 17:01

Oops let's hope it won't show as trending on here.

Thanks (0)
By Manchester_man
11th Mar 2017 03:01

A non-starter

I haven't studied the draft bill, but see the following quote from Tax Adviser magazine :

"The only anti-avoidance provision (which applies equally to the trading and the property income allowance) is a denial of relief where the relevant income is paid by or on behalf of a person who is the employer of the individual or someone connected with that individual".

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Replying to Manchester_man:
By Chipette
11th Mar 2017 07:28

Thank you Manchester_man.

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Replying to Manchester_man:
By Accountant A
11th Mar 2017 17:46

Manchester_man wrote:

I haven't studied the draft bill,

Didn't spot the Bill!


Schedule 5 covers the Property Income Allowance

783Z6 Exclusion from relief: payments by employer

No relief under this Chapter is given to an individual for a tax year if—

(a) the individual has relevant property income for the tax year,and

(b) the income includes a payment made by, or on behalf of, a person at a time when the individual is—
(i) an employee of the person, or
(ii) connected with an employee of the person.

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