Home Office Rent

tekton23

Hi,
I run a design studio via a limited company structure. Earlier in the year, I rented three desks at circa £380/desk + VAT in central London. I now work from a home garden office.
Given that I was paying £1,140 for my office space earlier, what is to stop me paying this as an expense to myself in future, given I have three desks here?
The monthly home office allowance is significantly lower than this amount, so presumably the higher expense cannot be justified. However, if I owned my flat and home office via a limited company structure (effectively a separate legal entity) then what is stop me charging my design studio, the higher rate?
Thanks,
T23

Mistral001

Apart from the tax issue, you would probably have to apply for Planning permission and Building Control approval for change of use of your flat from residential to commercial.  Also, should you decide to sell your flat,  you probably would have to pay corporation tax on any profit you made from the sale.

Edit:  that should be capital gains tax and not corporation tax.

Pennywise

If your company pays you rental for the office space, yes it can claim tax relief on the expense, but you personally would pay income tax on the rental income.
If you sell your house to a limited company, you'll immediately lose main residence relief and the company would be liable to tax on the gain/profit made when the company ultimately sells the house.  You, personally, would also have a personal taxable benefit in kind tax charge on your "benefit" value of living in a house owned by a limited company.
By all means ask your accountant to explain and put numbers to the pros and cons, but most people wouldn't do either course of action you suggest because you could end up with bigger tax bills!

tekton23

Thanks for your replies!
I thought it worth asking, perhaps just best to see what the maximum I can charge under home office expenses is. I spent a significant amount just building the home office, and now even more on solar shading and air-con, perhaps I should claim for the capital costs.