The Short Answer
As long as the flat is without doubt a second home (not your primary residence) then the rent is an allowable expense.
Working a long way from home?
As a Contractor you might sometimes end up taking on a client that is not in commuting distance to your home. When this is a contract lasting a few months it often makes financial sense to rent a flat close to the client, rather than spending a huge amount of money on extended hotel stays.
This raises the question of whether or not a Contractor can charge the rent of a flat to their company.
Conditions on charging rent to your company
The good news is that it is okay to charge rent to your company, which will reduce the corporation tax owed by the company. But, as always, there are a few conditions:
- The flat must be a clear ‘second home’. This means that you must continue to maintain your primary property and you should not be at the second home at weekends.
- To ascertain which home is your primary residence HMRC will consider factors such as where your bank statements get sent and where you are on the electoral roll. So do not transfer any of these things to your temporary rental property.
- If you do use the property for personal use (eg weekends when you are not working) then you should apportion the rent so that you personally pay for the days you are receiving a personal benefit.
- Associated costs can also be charged to the company but bear in mind that the standard ‘wholly and exclusively’ rules apply to these expenses. If you think HMRC could argue that you are benefitting personally from any expenditure do speak to your accountant about it.