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Where Taxpayers and Advisers Meet

Use business to finance office build on my land

pigsfoot
Posts:4
Joined:Mon Jun 09, 2014 12:31 pm
Use business to finance office build on my land

Postby pigsfoot » Fri Feb 25, 2022 6:45 pm

Hi,
Just thinking out aloud here but i have a very large garden and i have permission to build an office within the garden which i will use for my business. I currently rent offices so when ready the plan will be to close them and move into the new ones at home and i was going to charge rent for the use of them.

My question is to ask if there is anyway the company can pay for the offices to be built with no tax implication to myself. I know if i was to take a loan from the company over say 5 years there is a tax liability to myself and the company which i don’t want to do. What i was wondering is if the company could pay for the building works and in return i wouldn’t charge any rent for the period equivalent to the build cost, approx. 100k. I am thinking £1500 / month rent so over approx. 5 years he build would pay for itself.

I understand any rent paid to me is taxable via self assessment, what i want to avoid is additional tax if i can get the company to pay for it rather than i use personal funds of 100k and then get it back slowly via rent.

I hope that makes sense, any suggestions would be appreciated, just want to have some ideas before i go to my own accountant. Thanks

Jholm
Posts:360
Joined:Mon Mar 11, 2019 4:22 pm

Re: Use business to finance office build on my land

Postby Jholm » Mon Feb 28, 2022 5:10 pm

You're going to get stung on CGT if you ever sell that house as it scuppers your chances at full PPR.

pigsfoot
Posts:4
Joined:Mon Jun 09, 2014 12:31 pm

Re: Use business to finance office build on my land

Postby pigsfoot » Tue Mar 01, 2022 9:46 am

@Jholm Please explain why, the building is ancillary to the main house and will not be residential as we only have permission to use it as a home office / workshop. If or when we do decide to sell ( 5 - 10 years ) this building will form part of the sale as a whole, therefore i can not see why it would have any affect of the PPR. Thanks

Jholm
Posts:360
Joined:Mon Mar 11, 2019 4:22 pm

Re: Use business to finance office build on my land

Postby Jholm » Tue Mar 01, 2022 9:48 am

If a part of the property is used entirely for business purposes and claimed as such, you cannot claim PPR relief on that element.

pigsfoot
Posts:4
Joined:Mon Jun 09, 2014 12:31 pm

Re: Use business to finance office build on my land

Postby pigsfoot » Tue Mar 01, 2022 10:26 am

OK, thanks, thats very helpfull. I think the long term plan would be to use it as a office for say 5 years and then apply for residential use as a Granny Annex type of thing. If we then use it as such for 18 months ( we have no plans to sell any time soon ) or so i expect it will revert back to residential and hopefuly we get still get the PPR


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