Renting through LTD Company and Mobile Phone

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    Renting through LTD Company and Mobile Phone

    Good Evening All,

    Normally I would send this question to the Accountant but he is away on a family emergency so didn't really want to ask him this now as it's not mega urgent.

    I am renting Property through a LTD Company and my Accountant said that each Director of the LTD Company is entitled to a Mobile Phone. The Mobile Phone can be claimed back through the accounts by way of expenses - the situation is the same when dealing with a monthly contract - but both have to be in the name of the LTD Company to be eligible to claim back.

    I am trying to work out the pros and cons of doing this. I normally enter rough figures in an Excel spreadsheet that contain a list of expenses, profit and 19% corporation tax taken off the amount - this is to give me a rough idea on how much Corporation Tax I will more than likely have to pay.

    My figures are as follows:

    Income - £9,000.00 per year
    Expenses (without mobile phone and contract) - £4,396.85
    Profit - £4,603.15
    - 19% Corporation Tax = £874.60

    If I add the mobile phone into the equation, the figures are as follows:

    Income - £9,000.00 per year
    Expenses (with mobile phone and contract) - £5,008.85
    Profit - £3,991.15
    - 19% Corporation Tax = £758.32

    The benefit I can see by claiming the mobile phone and contract through the LTD Company is a saving of £116.28 of Corporation Tax per year which can amount to a substantial saving as the years go by - the other benefit is that I won't be paying for the mobile phone and contract from my monthly salary (approx £612.00 per year / £51.00 per month) - the outgoing will be from the rental income.

    Unless I'm missing something - these are the only two benefits I can see. However, if someone would be so kind to put me right on this then I'd be most grateful...

    Many thanks!

    #2
    Sounds like bull/fraud to me.

    A £650 mobile phone contract per year to run rental properties. I don't think so, unless there are a few dozen properties and this is a full time job and even then, nobody needs a £50/month mobile contract for this purpose.

    Comment


      #3
      When you transfer the cost of mobile phone paid by you to paid your company,

      There is only one party who gets the benefit - you.

      The other two parties are losers - your company gets to pay the expense of £612 and the tax office gets less tax revenue £116

      Comment


        #4
        AndrewDod,

        Not sure why you think it's fraud - I did question this with the Accountant and he said it's within the HMRC rules?

        Comment


          #5
          Yeah right

          Comment


            #6
            As long as it's one phone it's fine.
            The benefit in kind on a phone is zero.

            The business is allowed to make decisions that cost it money, HMRC aren't able to force companies to be maximally profitable.

            If there are other shareholders in the company, they should formally agree the decision with them, because it isn't in their interest and as a director you owe them a duty to act in their best interests.

            It would be dodgy if this was done by a private individual acting as a property investor.
            When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
            Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

            Comment


              #7
              That's very helpful, thank you.

              Comment

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