As the Director of a limited company, it is likely you will spend a certain amount of time working at home.
Some of the work you are likely to carry out at home includes completing your expense claims forms and forwarding them to us, as well as other administrative work.
HMRC allow you to claim £4 per week (no questions asked) for the business use of your own private residence. To claim any more than this you must be able to prove two things. Firstly, that this expenditure is justified. And secondly, that it is incurred exclusively for your job.
However, there is a way you can increase the amount of household costs you can claim. It is possible to charge your company rent for a room used exclusively for business purposes.
The rent is calculated as a percentage of household costs that can be attributed to the room in use. This can be deducted as an expense from your limited company accounts. And the good news doesn’t stop there; this expense is offset by your household costs meaning there is no income tax to pay on the rental income.
It is worth noting that if you wish to charge your limited company rent, the room in question cannot be used for any other purpose. This means that a spare bedroom or a desk in the garage that is used as an office would not qualify. We would advise that if this is the case, you only claim the £4 per week allowance.
Either way, the administrative requirements of running a limited company, plus the additional work you do from home, means you are able to claim some expenses.
Simplyco are expert contractor accountants and offer tips and advice to help their clients manage their expenses. To see how we can make your life less complicated, please give us a call on 01900 898 440 or email email@example.com.
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