Can a Director rent one of his Ltd Co Properties?

Hi Peter

You would need to check mortgage conditions.

Also, the rent would have to be at open market value otherwise any shortfall might be taxed as a benefit in kind.

You may also need to consider ATED rules >>> https://www.gov.uk/guidance/annual-tax-on-enveloped-dwellings-the-basics
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Hi Peter – you don’t say whether there is a mortgage or not, or if there are any other directors of the company. If the company has no mortgage (with its own T&Cs), I can’t see there being a problem, provided the director Mr Smith is completely above board in terms of the terms of AST, the level of rent etc. The company is a completely separate legal entity from Mr Smith as a private individual, and he has a responsibility to ensure the company does not lose out by renting to him. As Mark says, he should research local rent levels and ideally get some estimates from local letting agents; the AST should be a completely standard one with no special conditions or privileges for the director; and ideally the contract should be co-signed by another director. The arrangements as regards repairs and maintenance should also be crystal clear.

To be on the absolute safe side, Mr Smith should perhaps consider clearing the arrangement with the company’s accountants beforehand, and ask them to put something in the annual accounts to confirm they have approved things. This will make life so much easier if HMRC come sniffing and are are thinking of seeing this as a benefit in kind.

Check your mortgage details. But if this is basically a way to get round rules on residential interest only mortgages or any other conditions of the lender, then it is unlikely that there will be a loophole to exploit.