Any Answers Answered: Year ends and home costs

20th Jul 2018
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TAXtv hosts Tim Good and Giles Mooney pick AccountingWEB member questions to answer on corporation tax and changing company year ends, and the use of home costs for a limited company.

To watch the full video of Good and Mooney answering readers’ questions, click here or scroll down to the bottom of the page.

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Corporation Tax and changing company year end

The first question this month comes from AccountingWEB member anneaccountant, who put forward a scenario involving a new limited company client with a dormant period of trading at the start of its existence and asked: “is there any advantage in changing company year end in relation to corporation tax?”

Good and Mooney first considered a number of answers from AccountingWEB members on the forum, then went on to look at whether there was a need to stick with the current year end date and what advantages (if any) could be gained from changing it.

The full answer can be viewed from the start of the video.

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Use of home costs limited company

AccountingWEB member soundadvice had a query on use of home costs by a one-man limited company.

“On a space and time apportionment basis it looks like around 15% of running costs of the home would be reasonable, and if he had been self-employed this would create an allowable expense of around £1,500 per annum.

“As he is not self-employed, however, is there another way round it? Could he charge his limited company then put this rental income on his personal tax return but offset it with the £1,500 of apportioned expenses so there is no personal expense account to pay?”

Both Good and Mooney agreed that it was pretty standard fare for owner-managed businesses, but that the issue did have an awful lot of questions and problems to consider, and cautioned viewers to be aware of any potential capital gains tax issues.

The full answer can be viewed from 4m20 into the video.

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Full video

For the latest episode of TAXtv visit PTP Interactive. TAXtv is a monthly tax update programme available as an annual subscription from £199, (11 issues plus special editions) to view online, download from the internet or watch on DVD.

Replies (3)

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By FrogHappy
23rd Jul 2018 12:16

What about the new restriction on finance costs for residential landlords? Would you view the rental of a room in a residential property as falling foul of this new legislation? If so, it is no longer so simple to claim the same amount of expenses as income to arrive at a nil rental income each year.

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By katrinakilcoyne
10th Sep 2018 15:24

Yes I am interested in FrogHappy's question. Is anyone able to answer this question? My thinking is that the home rental costs need to be adjusted for the mortgage interest restriction.

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By katrinakilcoyne
10th Sep 2018 15:27

just adding this to get updates on this discussion (forgot to hit "receive updates"

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