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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I have this fiscal set up a limited company to offer consultancy

Resolved Question:

I have this fiscal set up a limited company to offer consultancy services. It will not generate enough revenue to warrant VAT registration yet, but I would like to know the kind of expenses I can charge. Eg working from home and at the London office of the Inst.of Directors, can I allocate some domestic costs for my study? Apart from travel,mileage,mobile phone,office materials,can I charge professional subs, admin support from adult children, etc.
I am not drawing a salary from this and it's not designed to own any assets, so do I need to set up a dividend policy ,as paying corporation tax is preferable to the higher personal tax rates.
On a separate issue, I recently inherited two houses which are rented out. Is there any value in setting up a separate business just to manage these assets,again so the tax paid on rental income is lower than personal tax, and these houses will need some investment before being sold ultimately.
These may be more than 1 question, but I have yet to find an accountant.
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

[q]
I would like to know the kind of expenses I can charge. Eg working from home and at the London office of the Inst.of Directors, can I allocate some domestic costs for my study? Apart from travel,mileage,mobile phone,office materials,can I charge professional subs, admin support from adult children, etc.

[a]
You can certainly charge for use of home as office. HMRC have some guidelines on it and more information on it can be found here

http://www.hmrc.gov.uk/manuals/bimmanual/bim47825.htm


You may claima fixed rate for use of home. The rate applicable is baed on your calculation of the number of hours that you work at home "wholly and exclusively" for the purpose of the trade
25-50 hours worked per month - £10pm
51-100 hours worked per month - £18pm
101+ hours worked per month - £26pm

You can charge for professional subs if they are wholly and exclusively for the business.

Charging for admin support from adult children - all depends on nature of work, hours worked, whether they have another job, frequency of payments etc as there may be PAYE implications.

[q]
I am not drawing a salary from this and it's not designed to own any assets, so do I need to set up a dividend policy ,as paying corporation tax is preferable to the higher personal tax rates.

[a]
If you are not drawing a salary and you wish to have access to the profits then yes you would need to set up a dividend policy.

[q]
On a separate issue, I recently inherited two houses which are rented out. Is there any value in setting up a separate business just to manage these assets,again so the tax paid on rental income is lower than personal tax, and these houses will need some investment before being sold ultimately.

[a]
This is a personal choice... you could hold these properties in a LTD company but it has advantages and drawbacks.

Based on a small portfolio of properties to date, I would be inclined to leave them in own name but review the situation annually.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 2 years ago.

Hello Chris

I notice you have viewed my lanswer to your multi part question about running your LTD company from home etc (</spanCustomerLast Viewed on 07/11/2014 at 12:47).

Just checking to see if you have any issues relating to your question that I may not have addressed. Please let me know if I can be of further assistance.

If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to you.