Rent your property to your business to extract profits

A not uncommon arrangement for a doctor or dentist would be that they personally own the property from which their business trades.

Especially relevant for practice owners, mainly because that it is often not desirable or beneficial for the property to be held within a limited company, the structure from which many practice owners trade. In this situation it is possible to charge a rent to your business for the use of the premises. This rent does become taxable on the director, although NIC does not apply, however there will be a full taxable deduction in the business accounts. In turn this means business profits can be extracted in the genuine form of rent paid. Especially useful when a director has losses from other property rentals that can be offset.

How should you do this?

To formalise arrangements it’s best to draw up a rental agreement between the business and director/s. And the rent needs to be charged at a commercial market value so as not to raise eyebrows.

Does your business trade from a property you own personally?

Discuss your options with one of our specialist advisors.

Call us on: 020 7376 9333