If I own a commercial property (factory) and let my own company (of which I am sole director and shareholder) occupy and use it for zero rent, am I breaking any tax law? I should be paying tax on the rental income I would be receiving as landlord at a higher rate, as part of my personal self-assessment income, than the lesser corporation tax rate that I will be charged on the extra profit in my company (because I have fewer outgoings, so will make more profit). I have read somewhere that I am required to charge a market rate for a commercial property in this set-up where I am the sole director and shareholder – and not to do so could be deemed tax evasion. Is there any relevant area of tax law that deals with any requirement to have to charge market rate rent on commercial property? 

Arthur Weller replies:  

You are not breaking any law by letting your company use the factory for nothing. You are free to do as you want, and there is no requirement to make calculations about the personal income tax saved, and the corporation tax consequences. In fact, the associated disposal rules for business asset disposal relief say that relief is only available to the extent that no rent is charged. See HMRC’s Capital Gains manual (tinyurl.com/2p993eea).