Charge company for home office use

looknohands

I have a limited company and work from home quite often, weekends, some days and evenings, around 30 hours per week.

I was wondering if I can charge the LTD company flat rate working from home charge £312 per year?
Do I pay this to my personal account from the business bank account?
Would I then need to declare this as rental income through my self assessment even though it covers a personal expense (gas, electric, mortgage interest)?
Roughly how much more could I save not using flat rate scheme? I use around 20% of one room in a 5 room house for 120 hours a month.

phill99

If your company charge you a fee for using your home, you will have to pay income tax on it as it will be classed as an income,

looknohands

Would't the gas, electric and mortgage interest payments be an expense of me renting my home to my business though, so no income tax would be due?

Savvy_Sue

if you have a ltd company, do you not have an accountant? they would be best placed to advise you. If you are newly formed that's particularly important as filing your company accounts is not always as straightforward as people think. (And no, IANAA).

Aquamania

looknohands wrote: »

I have a limited company and work from home quite often, weekends, some days and evenings, around 30 hours per week.

I was wondering if I can charge the LTD company flat rate working from home charge £312 per year?
Do I pay this to my personal account from the business bank account?
Would I then need to declare this as rental income through my self assessment even though it covers a personal expense (gas, electric, mortgage interest)?
Roughly how much more could I save not using flat rate scheme? I use around 20% of one room in a 5 room house for 120 hours a month.

looknohands wrote: »

Would't the gas, electric and mortgage interest payments be an expense of me renting my home to my business though, so no income tax would be due?

Have to agree getting an accountant would be your best route forward.

Because I don't follow how expenses incurred relates to the flat rate you propose.

Whats more, you'll also get into trouble with your mortgage provider if you wish to be a landloard, and you can only claim expenses if you are in business (e.g. as a landlord) so you need to let HMRC know as said above.

However, a simpler method maybe to simply claim up to £4 per week from your employer (your limited company)
https://www.gov.uk/tax-relief-for-employees/working-at-home

But if you want to claim more, this may help
https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home

(but probably not as much as an accountant would )

MataNui

If you look on the HMRC website it simply suggests a flat rate which is very low (what Aquamania posted). This is intended for office workers who also do some work at home. Its a flat rate which is not taxable.

Your situation is closer to what i used to do. I used to permanently work from home and since it was IT related i had several machines running almost 24/7 so my company was costing me personally a fortune in electric and heating. I billed my company £40 per week.

This is deducted as a valid expense from the company account but appears as income on my personal tax return. On my personal tax return i claim a proportion of that as expenses against (as you identified) my Heating, Electric, Phone and BB and Interest on Mortgage.

So in short my company tax return has an expense of £2160 ish tagged as 'Rent'
My personal tax return has an additional income of £2160 but deductions of about half that figure to account for costs of providing the space.

I do have an accountant so i know all this is above board. One of the advantages of making a small profit on the 'Rent' is it another way of diverting company funds to a personal account without NI.

antrobus

looknohands wrote: »

I have a limited company and work from home quite often, weekends, some days and evenings, around 30 hours per week.

I was wondering if I can charge the LTD company flat rate working from home charge £312 per year? ....

Your Ltd Co, as your employer is free to pay you "£4 per week (£18 per month) towards your expenses" free of any tax or NI. Which is £216 a year. That's the flat rate scheme.

If you want to be paid more than that, you will have to provide receipts etc, i.e. convince HMRC that a bigger number is justified.

https://www.gov.uk/tax-relief-for-employees/working-at-home

looknohands wrote: »

...Do I pay this to my personal account from the business bank account?... .

You can do. Or simply credit the amount to your director's loan account.

looknohands wrote: »

....Would I then need to declare this as rental income through my self assessment even though it covers a personal expense (gas, electric, mortgage interest)?

No.

looknohands wrote: »

.......Roughly how much more could I save not using flat rate scheme? I use around 20% of one room in a 5 room house for 120 hours a month.

The flat rate state scheme gives you £216 a year. You want £312 a year. So if you're not a higher rate tax payer that's 20% of £96 or £19.20.

P.S. You can't include mortgage interest, or council tax for that matter in your calculation. You'd have to pay those anyway. You're only supposed to claim for the additional costs you incur as a result from working from home.

Suarez

A lot of information on this thread is incorrect. Antrobus has the correct information.

The simplified expenses your are talking about are for the self employed OP.

Pennywise

Suarez and Antrobus are correct re the £4 per week which is set to cover the extra costs of working from home and yes, if your "extra" costs are more, then you can claim them if you can justify, i.e. prove the extra costs.

But, there's another angle which is why some earlier poster(s) are also right, in that the company can "rent" space in your home, and in that case, yes, you can claim a proportion of all home costs including mortgage interest, rent, etc. But the downside is having to show all the income as rent on your personal tax return and then claiming the proportion of all expenses, all on the "land and property" pages of the personal tax return. You can choose to set the amount of rent as exactly the same as the proportion of all home costs, meaning no profit, or you can charge more, make a profit and pay tax on that profit, and yes, these days, that's better than taking the money as wages or dividends, but the rent charged must still be reasonable open market rate for the time/space occupied.

HappyMJ

Pennywise wrote: »

the rent charged must still be reasonable open market rate for the time/space occupied.

This bit is very important.

I wouldn't get away with charging the company £150 per week when a fully serviced office down the road in the business centre charges £54 per week.

I personally charge my company £12 per week for 8 hours use per day of a second bedroom for 5 days a week in my house with everything included. Total relevant household expenses (rent or mortgage interest, gas, electricity, broadband, council tax) come to about £160 per week so it can't be claimed I'm over charging.