Contractors' Questions: Can a second rented room be an office I claim for?

Contractor’s Question: I’m currently lodging, renting a single room in a house. But having just begun PSC contracting, I’m starting to struggle with the limited space so am looking to rent a second room as my office. Would such an office count as a legitimate business expense to pay for through my limited company?

Expert’s Answer: Assuming that you have no other residential property available for your use, the lodgings are your main residence.

You should be careful that the second room is not used personally; if it is, any claim would be jeopardised by the ‘duality of purpose’ rule that denies tax relief if the purpose is both business and personal.

Provided that you can demonstrate a clear business use, without anything other than merely incidental personal use, then the company can meet the cost and obtain tax relief without a personal tax liability arising.

It is advisable that the company enters into the agreement directly with the landlord and pays the landlord without involving you personally.

But if the company meets the cost and the room is used personally more than merely incidental to the business use, then expect the cost to be personally taxable -- in part or in full.

The expert was Neil Kellaway, Operations Manager at Intouch Accounting.

Editor’s Note: Related Reading –

Contractors’ Questions: How much to claim for my home-based office?

Contractors’ Questions: Can I claim hotel, travel and office expenses?

Contractors’ Questions: Can my company pay for home office fittings?

Wednesday 20th Feb 2019
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Written by Neil Kellaway

Neil started a career as an Accountant in 2011, specialising in helping hundreds of contractors. Neil enjoys building relationships with clients and helping them manage their finances all the way through their contracting career. Whilst also helping manage and develop the next Accountants within Intouch.
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