CHARGE MY LIMITED COMPANY RENT FOR HOME OFFICE - FREE TENANCY AGREEMENT TEMPLATE

When working from home as a limited company director, you can claim working from home allowance under the rules of a normal employee. You can find these here;

Spondoo - Home Office LEASE AGREEMENT – individual to limited company (1)

However, as a director of a limited company it can be more tax efficient to setup an agreement with your company and charge a market rate for renting your home office out to your company.

Benefits of Charging your Limited Company Rent

Higher Corporation Tax Deduction - unlike the allowance for Self Employed individuals the working from home allowance calculation for employees does not allow you to include mortgage interest or rent you have paid personally on your home. This means the corporation tax deduction is comparatively low. Setting up an agreement with your limited company allows you to charge your company rent as a higher rate, thus lowering your corporation bill.

Lower National Insurance - charging your company rent allows you to extract a reasonable amount from your business without paying national insurance

Downsides of Charging your Limited Company Rent

Rental Income - unlike receiving money from your company under the working from home allowance, the rental income you received from your limited company becomes taxable rental property income and needs to be incorporated within your personal tax return. You can however calculate costs and expenses for providing this home office.

Capital Gains Tax - if you own and live in your main residential property, it is very likely you will be entitled to Private Residence Relief so you will be exempt from capital gains tax. When setting up a commercial tenancy agreement between you and your limited company you are essentially telling HMRC that part of your property is a commercial premises. This can impact your entitlement Private Residence Relief - you need professional advice on this.

Here you can download your Free Tenancy Agreement Template: Spondoo - Home Office LEASE AGREEMENT – individual to limited company.docx

Get in contact if you need proper advice from a qualified accountant - https://www.spondoo.co.uk/contact/

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Information provided on the site is merely guidance that may change in line with UK law and regulations. Users must not consider this to be financial advice or their sole resource when making any financial decision. Spondoo is a trading name for Accounting SQL Limited, authorised & license accounting firm under the Institute of Financial Accountants.

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