Last updated: 14 October 2026
Can your company reimburse all the costs of a flat you use for work?
Only in limited cases. If your company pays for or reimburses a flat you live in, it is usually a taxable benefit in kind, and both you and the company may owe tax and National Insurance. The main exception is accommodation used while you work at a temporary workplace away from home, which can be paid tax-free under the travel and subsistence rules. A flat near your permanent workplace, or one you use as a home, is not a business expense in the same way.
When reimbursement is tax-free
| Situation | Tax position |
| You work at a temporary workplace away from home, for example a 6-month project in another city | Accommodation and reasonable living costs can be paid tax-free |
| The work assignment is expected to last more than 24 months | The workplace is treated as permanent; no relief |
| The flat is near your normal office | Taxable benefit |
| The flat is your main home | Taxable benefit; may also be “living accommodation” with special rules |
| The company rents a flat used only as an office or for storage | Business expense, no benefit if no private use |
How a taxable benefit is worked out
If the company provides living accommodation, the benefit is usually the higher of the rent the company pays and the property’s annual rental value. Household bills the company pays, such as utilities and council tax, are added. The director pays income tax on the benefit through their tax code or Self Assessment, and the company pays Class 1A NIC at 15%.
Reimbursing part of a home
If you work from home as a director, the company can pay you £6 a week (£26 a month) tax-free for additional household costs. Higher amounts need evidence of the actual extra costs. Rent for a room used exclusively for business may be possible under a formal licence agreement, but the income is then taxable for you.
Example
A director takes a 9-month contract at a client’s site in Manchester, 200 miles from home. The company pays £1,200 a month for a short-let flat. Because the workplace is temporary and the assignment is under 24 months, the rent is a tax-free reimbursement and a deductible company expense. If the director moved to Manchester permanently, the same rent would be a taxable benefit.
Records to keep
- The contract or project plan showing expected duration
- Rental agreements and invoices addressed to the company
- A note of business use and any private use
- Your company’s expenses policy
VAT
Residential rent is exempt from VAT, so there is usually no VAT to reclaim. Hotels and serviced apartments may charge VAT, which the company can reclaim if the stay is for business.
Frequently asked questions
Can my company pay my mortgage?
That would be a taxable benefit or salary.
What if the flat is used partly for business meetings?
The benefit may be reduced, but private use usually makes it taxable.
Does it matter if I’m the only director?
No, the same rules apply.
Must I report the benefit?
Yes, on a P11D or through payrolling.
Related: business travel expenses and working from home relief.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with director expenses and benefits. See our limited company accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
