To ER is human

I have a limited company client which operates from premises owned personally by the director shareholder.

Until 5 April 2008 he paid himself rent from the company which covered his mortgage payments. It seems to me that if we continue to charge rent this will be detrimental to entrepreneurs’ relief.

The premises consist of two separate properties. One (A) is used wholly by the company and in the other (B) the ground floor is used by the company while the upstairs is a residential let.

There is very little mortgage outstanding on property A so if we lose the mortgage interest it will not matter too much. The potential capital gain on this property is much higher so there is no problem with disclaiming the rent.

However if we disclaim the rent on property B and if we assume that the interest is charged...