Director Rental Agreement

- April 09, 2021

The rent charged should include the use of all services provided to the home business, but be careful with the phone charges. If you use a private residential telephone line, you can only claim the cost of commercial interviews. You cannot claim the cost of renting the line because it is treated as a benefit in kind on which you pay taxes. HMRC argues that the rent for the line would have been paid anyway without professional use, since it is already installed for your private use. If you have installed a separate business line on behalf of the company, all fees are allowed and VAT can be recovered as usual. Of course, we strongly recommend that you discuss the licensing option with your accountant first, as there are so many factors to consider. The agreement must be reasonable and well developed to ensure that you do not fall into a tax trap unintentionally. You must determine how much the sharer must pay for the disk space. Under the agreement, the shareholder must pay the VAT due on the licence fee. The licence fee can be a weekly or monthly number, and the agreement covers the case where the agreement begins in the middle of a month.

For example, if the shareholder moves in on March 15, the payment would be half the monthly value for the period up to March 31, with the next monthly payment due on April 1. I would have thought that the “owner`s name” on the contract was “company name” – but I think we both have to sign it (the directors), but then I should give both names… Bob must also enter $1,666 of rental income on his personal self-assessment return, but it will not be taxed on that amount, because the associated costs for the operation of the $1,666 home are also entered on the tax return, so the profit to Bob is zero. Alternatively, you can opt for a third option – creating a rental license between you and your own limited company. You should be careful in developing such an agreement (we recommend of course to seek professional help) and be able to justify the amounts in question. However, it is important to note that if you are a home manager or employee, you cannot claim mortgage interest or rent, but if you are self-employed, you can do so.

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