Buying a 2nd home (studio flat) in London for work
Discussion
Living a couple of hours from London, the cost of hotels means it would be cheaper to buy a small studio flat through my Limited company and then stay there whilst working in London. Does anyone do this and is it permissible under HMRC rules if you can demonstrate that it saves the company money?
Apart from the usual allowance HMRC permit for " Use of Home for Work", HMRC does not allow a business or an employer to offset the cost of running a home for an employee as a business expense.
In fact, if it does pay the domestic bills on behalf of an employee/director, it will create a taxable Benefit in Kind on the employee/director.
In fact, if it does pay the domestic bills on behalf of an employee/director, it will create a taxable Benefit in Kind on the employee/director.
psi310398 said:
Is there anything stopping a SIPP or a company buying a commercial space, which happens to have a workplace kitchen and washroom?
Planning laws apart, what practically would stop the OP putting a sofa bed into the office? If he then happened to need to pull a couple of all nighters…
The office I have in my Sipp is set up in this way. You could certainly spend the night easily enough - but I'm pretty sure planning laws prevent it in addition to it breaking HMRC pension scheme rules.Planning laws apart, what practically would stop the OP putting a sofa bed into the office? If he then happened to need to pull a couple of all nighters…
Can you find an AirBnB in an area that suits you for staying in for work when away from home, negotiate Mon-Thur or whatever for a few weeks at a time, and pay for it from your LtdCo in the same way that you would pay a hotel bill.
The Stamp Duty on a Studio could easily be GBP10k-20k, which pays for a lot of accommodation, that somebody else cleans, maintains etc...
The Stamp Duty on a Studio could easily be GBP10k-20k, which pays for a lot of accommodation, that somebody else cleans, maintains etc...
Eric Mc said:
Apart from the usual allowance HMRC permit for " Use of Home for Work", HMRC does not allow a business or an employer to offset the cost of running a home for an employee as a business expense.
In fact, if it does pay the domestic bills on behalf of an employee/director, it will create a taxable Benefit in Kind on the employee/director.
Ive worked for companies that have had a flat they leased and which various employees used when they traveled to HQ. So imagined it was tax deductible.In fact, if it does pay the domestic bills on behalf of an employee/director, it will create a taxable Benefit in Kind on the employee/director.
It's not a 'home' Eric, it's accommodation for work purposes, OP said he has a home already
Is there not some other way to classify it?
skwdenyer said:
JeffreyD said:
essayer said:
Could you buy it through a SIPP? then you’d rent it from the SIPP and your rentals would be part of its income?
A Sipp can't hold residential property.Can you buy SIPP commercial property with a residential element?
In most cases it’s not possible to use a SIPP to buy property with any residential aspect, because this would attract significant tax charges. But there are some very specific exceptions.
These may include:
Business premises with a ‘live-in’ employee (who is not a member of the owner’s SIPP scheme) such as a caretaker, warden or concierge.
Flats that form part of commercial premises, such as pubs or shops, where a key staff member, e.g a pub manager, is resident. Again, this person must have no involvement with the owner-scheme or any of its members.
https://www.onlinemoneyadvisor.co.uk/pensions/sipp...
hyphen said:
Ive worked for companies that have had a flat they leased and which various employees used when they traveled to HQ. So imagined it was tax deductible.
It's not a 'home' Eric, it's accommodation for work purposes, OP said he has a home already
Is there not some other way to classify it?
It's a second "home" as far as HMRC is concerned - especially if it is owned by the occupant who is making the claims.It's not a 'home' Eric, it's accommodation for work purposes, OP said he has a home already
Is there not some other way to classify it?
The other test it would fail is the "wholly and exclusively" test.
JeffreyD said:
This seems like a fair summary
Can you buy SIPP commercial property with a residential element?
In most cases it’s not possible to use a SIPP to buy property with any residential aspect, because this would attract significant tax charges. But there are some very specific exceptions.
These may include:
Business premises with a ‘live-in’ employee (who is not a member of the owner’s SIPP scheme) such as a caretaker, warden or concierge.
Flats that form part of commercial premises, such as pubs or shops, where a key staff member, e.g a pub manager, is resident. Again, this person must have no involvement with the owner-scheme or any of its members.
https://www.onlinemoneyadvisor.co.uk/pensions/sipp...
If accommodation is provided by an employer it is normally taxed as a Benefit in Kind on the employee. The cost of providing that accommodation WILL be allowable as a tax deductible cost for the business as it is part of the employee remuneration package. It's the employee who takes the tax hit. Can you buy SIPP commercial property with a residential element?
In most cases it’s not possible to use a SIPP to buy property with any residential aspect, because this would attract significant tax charges. But there are some very specific exceptions.
These may include:
Business premises with a ‘live-in’ employee (who is not a member of the owner’s SIPP scheme) such as a caretaker, warden or concierge.
Flats that form part of commercial premises, such as pubs or shops, where a key staff member, e.g a pub manager, is resident. Again, this person must have no involvement with the owner-scheme or any of its members.
https://www.onlinemoneyadvisor.co.uk/pensions/sipp...
If the accommodation is a necessary part of the employment - such as a live-in caretaker, a live in carer, a teacher at a boarding school, a shop employee who lives over the shop to provide security etc, then the employee will not suffer a BIK.
Eric Mc said:
If accommodation is provided by an employer it is normally taxed as a Benefit in Kind on the employee. The cost of providing that accommodation WILL be allowable as a tax deductible cost for the business as it is part of the employee remuneration package. It's the employee who takes the tax hit.
If the accommodation is a necessary part of the employment - such as a live-in caretaker, a live in carer, a teacher at a boarding school, a shop employee who lives over the shop to provide security etc, then the employee will not suffer a BIK.
The post was entirely about what it is possible for a SIPP to own without punative penalties.If the accommodation is a necessary part of the employment - such as a live-in caretaker, a live in carer, a teacher at a boarding school, a shop employee who lives over the shop to provide security etc, then the employee will not suffer a BIK.
In essence it can't legitimately own anything that provides accommodation to anyone connected to the pension, even if they are the employee working in the business.
Was always interested how this panned out on the tax side of things....
Going back to the late 90s, early 00s I had a share in a design company. Our office was off Goswell Road in Clerkenwell -one floor of a block owned by an Architect's firm who occupied all five floors to the right, renting the others on the left. They converted the top floor to a flat for the primary purpose of accommodating visiting clients. It was a stunning flat and they even built a very nice roof garden. I never once saw it used by a client. We used it a couple of times to crash after a big night out. Some of our younger, single colleagues occasionally made 'use' of it. One of the Directors of the Architects ended up getting divorced and essentially lived there during the week, going home to his parents at weekends. Did this for about 18 months.
I assume that they would have had to declare it as non workspace, but technically it sort of was. It wasn't a hotel but could act as one. It wasn't where anyone lived but sort of was for a while. My guess is that they probably didn't reveal what it was - just another office (but with a bed).
Going back to the late 90s, early 00s I had a share in a design company. Our office was off Goswell Road in Clerkenwell -one floor of a block owned by an Architect's firm who occupied all five floors to the right, renting the others on the left. They converted the top floor to a flat for the primary purpose of accommodating visiting clients. It was a stunning flat and they even built a very nice roof garden. I never once saw it used by a client. We used it a couple of times to crash after a big night out. Some of our younger, single colleagues occasionally made 'use' of it. One of the Directors of the Architects ended up getting divorced and essentially lived there during the week, going home to his parents at weekends. Did this for about 18 months.
I assume that they would have had to declare it as non workspace, but technically it sort of was. It wasn't a hotel but could act as one. It wasn't where anyone lived but sort of was for a while. My guess is that they probably didn't reveal what it was - just another office (but with a bed).
CIS121 said:
Living a couple of hours from London, the cost of hotels means it would be cheaper to buy a small studio flat through my Limited company and then stay there whilst working in London. Does anyone do this and is it permissible under HMRC rules if you can demonstrate that it saves the company money?
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