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Can I charge a rent to my company for using the garage?

Question:
I have a business that makes use of my home garage for storing products I sell.  Am I able to charge my company for use of my home garage?

Arthur Weller Replies:
Certainly you are able to charge your company rent for use of the garage. But you need to be aware of four things. Firstly, in order to be an allowable expense for the company, to offset against its profits, it must be a reasonable amount of rent, i.e. not too much. A commercial rent is what an unconnected landlord would charge. Secondly, you must realise that what the company pays you will be rental income in your hands, and as such must be declared to HMRC and you will have to pay income tax on it. Thirdly, when you eventually sell your house the amount of principal private residence relief from capital gains tax may be restricted depending on how much the garage is exclusively given over to the business. Fourthly, it may impact on the council tax you may be required to pay.
I have a business that makes use of my home garage for storing products I sell.  Am I able to charge my company for use of my home garage?

Arthur Weller Replies:
Certainly you are able to
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This question was first printed in Business Tax Insider in September 2012.