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In these difficult times for buy-to-let investors, every little helps. And the following is a point on which the savings are likely to be modest; but nonetheless perhaps worth considering.

Assume you are a buy-to-let investor. You’ve had some difficulty finding tenants at an attractive return and your rental portfolio is running at a loss. You can carry the loss forward against future rental income, of course; but you can’t offset it against general income.

However, if you happen to be in the position of owning a company you may be able to generate some rental income by charging a rent to your company for the use of property which you own and the company uses. In principle you can set against this rental income any loss which you make on your buy-to-let portfolio, making the rental income from letting property to your company effectively tax-free.

What property might that be? Well, your own home, for example: if you work from home at all, or even store company goods or assets at your home, it would be perfectly proper to enter into an agreement to charge your company an appropriate rent. “Appropriate” is the key word – it is important that you should be charging no more than the going rate for the accommodation actually provided to the company. An approximation to the market rate should be readily ascertainable by looking at the rates being charged locally for serviced office accommodation. Beware: a lease which gives the company exclusive use of a part of your home may mean that you are denied CGT exemption on any gain made on eventual sale of your home that is attributable to the let part; but a licence that limits use of the designated part of the property to the working day five days a week will not affect the CGT position.

For more on this please contact help@bkltax.co.uk or your usual consultant.