from SE to Limited Company - tax question

[GrumpyOldBag]

I recently switched from being a sole trader self-employed to a Limited Company with one director (me).

When I was self-employed as I worked from home I was able to offset some of my household costs - utility bills, etc - against my revenues to reduce my tax liability.

I still work from home, am I able to do that as a Limited Company too?

Thanks.

[NNChangeAgain]

My understanding is that youwill be an employee of the company, so the company can pay you (as an employee) expenses to work from home;

www.gov.uk/expenses-and-benefits-homeworking/overview

[IceMaiden73]

As a director the rules are slightly different

www.rossmartin.co.uk/self-employed/what-expenses-can-i-claim-96898/631-use-of-home-as-office-calculator

[GrumpyOldBag]

Thanks. Icemaiden that calculator looks like how I used to do it when I was a sole trader, self-employed.

Just wondered if it is different now I am a Director of my own Limited Company.

[NNChangeAgain]

This article says that Directors are treated as employees, unless as the company owner, you change the company rent for using your home premises:

www.emtax.co.uk/blog/tax-relief-for-employees-and-directors-using-their-homes-as-an-office

[NNChangeAgain]

*charge

[GrumpyOldBag]

Thanks Change. So it seems I can either claim £4 a week, or rent my home office to myself - but then I will pay income tax on the profit which defeats the object, as the reason I set up as a limited company was to pay myself a tiny salary which is more tax efficient.

[dillyduck]

You wont have any profit as you pro rata the costs and so there is no profit.

I pay £1200 a year- paid in 1 lump sum. This is less than the pro rata costs for the space. I compared pre and post working from one bills as well which show the uplift in costs.

[GrumpyOldBag]

Good point dilly

[Ju222]

I work from home with 3 staff and I'm an accountant. I charge a rent for the office on which I pay tax but the company gains tax relief so nil effect. But by doing so it makes it seem a little more legitimate from hmrc's point of view that I also charge the company for electric (calculated on meter readings based on consumption before and after having the office here), and refreshments, cleaning products, loo roll, oil, coal, logs,etc etc at a weekly amount which I declare as additional rental income, but immediately offset by the same cost. Therefore no tax charge to me, but my company saves 20% on all those charges. As a director I have to do a tax return anyway so it's no hardship to complete the rental pages too. My other half is self employed so we do the same for him and declare it jointly, which saves him Class IV NIC on the rental charge too. Hope that helps.

[Ju222]

Ps, don't forget that with the new tax on divided rules, charging rent to your company (within reason!) would give you a way of taking money out of the company with a 20% tax bill to you, 20% tax saving to the company i.e. nil, as oppose to any divs over £5k being taxed at 7.5% on you with no tax relief to the company. Depends on your earnings of course.