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Buachaill
Buachaill, Barrister
Category: Law
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Experience:  Barrister 17 years experience
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Tax Question - how to account of accommodation if

Customer Question

Tax Question - how to account for benefit of accommodation
if one is running a B&B on a CONTACT MANAGEMENT BASIS - agreement of flat rate per hour of £10 accommodation included.
As it was necessary to be on the premise to do the job is the accommodation still a taxable benefit?
Submitted: 12 months ago.
Category: Law
Expert:  Buachaill replied 12 months ago.
1. Dear Craig, in the situation where it is necessary to be on the premises day and night to arrange accommodation, any live in arrangement is not taxable as a benefit with the HMRC. The provision would have to be an added "benefit in kind" from the job in order to be taxable. Here, where a person would have to get up at night to let late night revellers in, accommodation is not taxable as a benefit in kind. It is purely the £10 per hour which is taxed. Not the provision of accommodation.
Buachaill, Barrister
Category: Law
Satisfied Customers: 10276
Experience: Barrister 17 years experience
Buachaill and other Law Specialists are ready to help you
Expert:  Buachaill replied 12 months ago.
2. Please Rate the Answer as unless you Rate the answer your Expert receives no payment for answering your question.
Customer: replied 12 months ago.

That's good news - thanks for your quick response

Expert:  Buachaill replied 12 months ago.
3. You are welcome. Glad I could be of assistance.
Customer: replied 11 months ago.

Following on...I've since taken over the B&B and set the business up as a limited company. I am a director and employee of that company. as part of my work for the company I have to live on the premises to manage the business just as I did when I was working on a contract management basis however my accountant has advised me that the space I occupy must be accounted for as a benefit in kind and thus a % of the running costs of the house can not be claimed as business expenses.

This doesn't make sense to me. Why is it a benefit when i'm employed by my own company and not when I was employed by a 3rd party company?

Expert:  Buachaill replied 11 months ago.
4. I regret to say that the rules for limited companies and for operating as a sole trader are different. Once you occupy company property, a benefit in kind arises. YOu would have to occupy separate property, pay rent and then claim this back against your company as an expense in order for you to be able to make the deduction. I appreciate this might seem nonsensical. However, those are the rules, I regret to say.
Customer: replied 11 months ago.
Thanks for your response. I do indeed find it nonsensical but it is what it is! I was just following my own logic.
Your answer however raises another possibility....
The way we have structured things is the lease in in the joint names of the company directors, my partner and I, we have let the first two floors of the building to the B&B company and have retained the top floor apartment for ourselves.
Does the above set up qualify as 'separate property'?
Expert:  Buachaill replied 11 months ago.
5. Dear Craig, this top floor apartment would count as "separate property" and could be used for tax planning purposes in order to set off any rental payments made on the top floor apartment against the running costs of the bottom two floors. It is not company property but the need to stay overnight there still arises.

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