Directors, salary & dividends
Yes, under a licence agreement at a commercial rate. The company deducts the rent, you declare rental income and offset costs. The pitfalls to avoid.
Written and reviewed by Waqas Sagar Member of ICAEW, Fellow of ACCA, Fellow of AAT, a double graduate and entrepreneur at heart, helping startups grow and serving thousands of businesses nationwide with an excellent team. Published by LimitedCompany.Accountants, 12 London Road, Morden, London SM4 5BQ. Reviewed 12 September 2026 against 2026/27 UK rates and current Companies House and HMRC guidance.
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QuickBooks PartnerCertified ProAdvisor100+ yearsCombined team experienceFully insuredUp to £2m indemnityYes. With a written licence at a commercial rate, the company deducts the rent against profit and you declare it as property income on your Self Assessment, offsetting the related household costs. Done properly it is usually tax neutral or better for you personally.
Getting it right
Risks to manage
Yes. With a written licence at a commercial rate, the company deducts the rent against profit and you declare it as property income on your Self Assessment, offsetting the related household costs. Done properly it is usually tax neutral or better for you personally.
You need a licence agreement between you and the company setting out the space, the hours, the rent and the term, with the rent supported by something objective such as local serviced office or desk rates for comparable space. An arbitrary round number is the weakness HMRC looks for.
Personally, you deduct a fair share of mortgage interest, council tax, insurance, heat, light and repairs against the rent. If costs roughly equal rent, your taxable profit is nil while the company gets a real deduction.
Avoid exclusive business use of a room, which can restrict private residence relief on capital gains when you sell. Shared use, evenings and weekends personal, avoids that entirely.
If you rent rather than own, check your tenancy allows business use, and if you have a mortgage, check the lender's conditions. Business rates can apply in unusual cases where a part of the property is used solely for business.
Rates, thresholds and deadlines quoted here reflect the 2026/27 UK position and current Companies House and HMRC guidance. Check GOV.UK, or ask us, before relying on them for your own company.
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We work with company directors across London and Surrey from our office at 12 London Road, Morden, London SM4 5BQ. Pick your area, or send the form below and we will call you back.
Frequently asked
Enough to reflect the space and hours used, benchmarked against local desk or small office rates. For a spare room used part time, a few hundred pounds a month is typical.
No. Rent is property income, not earnings, so no National Insurance arises.
No. Choose one route, not both.
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No. This page explains general UK rules and common accounting treatment. Your facts, contracts and wider tax position must be reviewed before you rely on a conclusion.
Included approach
Check the current rules
Deadlines, thresholds and filing rules change. GOV.UK and Companies House publish the current statutory position; advice should then be applied to your company’s circumstances.
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