Can I live in a house owned by my limited company?

A director can occupy a property their own limited company owns. No rule of company law prevents it, and plenty of owner-managers ask about it after building a property company and noticing the company has cash and they need somewhere to live. The problem is that Parliament wrote a specific tax code for exactly this situation in 2003, and that code is designed to make employer-provided housing expensive.

The instinct behind the question is usually "it is my company, my money bought the flat, so it is effectively my house". HMRC starts from the opposite end. The company is a separate person, it owns the asset, you are its employee, and a separate person housing an employee for nothing is providing a benefit. Read that way, whose money bought the property stops being relevant and the only live question is how the statute values the benefit. Where the answer turns out to be "charge full market rent instead", the mechanics of setting and documenting that lease live in our guide to charging market rent to your own property company.

Short answer: yes, but it rarely makes tax sense

Occupying a company-owned property without paying full market rent creates a taxable benefit in kind on you personally, an employer National Insurance cost for the company, and a strong likelihood that any ATED relief the company claimed is clawed back. Paying full market rent removes the benefit charge, but then you are paying rent out of taxed personal income into a company that pays corporation tax on the rental profit, which is usually worse than simply owning the home yourself.

That is the whole shape of the problem. There is no version of the arrangement where the company quietly houses its director for free. The three routes (rent-free, below-market rent, full market rent) each carry a defined cost, and the comparison table further down sets them side by side.

The one context where company-provided accommodation is genuinely tax-efficient is job-related accommodation under section 99 ITEPA 2003, and HMRC guidance is explicit that those exemptions are switched off for most directors. A director qualifies only where they have no material interest in the company and are either a full-time working director or work for a non-profit or charitable company. Material interest means more than 5 per cent of the ordinary share capital (section 68 ITEPA 2003), counting associates' holdings, so an owner-director of their own property company is excluded before the test even gets interesting.

Benefit in kind on company-owned accommodation

Living accommodation provided by reason of employment is taxed under Part 3 Chapter 5 of the Income Tax (Earnings and Pensions) Act 2003, sections 97 to 113. This is a self-contained valuation code. It does not ask what the property is worth to rent today, and it does not ask what you would have paid on the open market. It applies a statutory formula.

The basic charge, section 105

Where the cost of providing the accommodation is £75,000 or less, the cash equivalent under section 105 is the greater of:

• the annual value of the accommodation for the taxable period, or
• the rent paid for the taxable period by the person providing it,

less any rent you pay for it for that period. So if the company owns the property outright and pays no rent, the measure is the annual value. If the company itself rents the property and lets you live in it, the measure is the rent the company pays, which is usually the larger figure.

Annual value is defined in section 110(1) ITEPA 2003 as the rent that might reasonably be expected on a letting from year to year with the tenant paying the usual rates and charges and the landlord bearing repairs and insurance. In practice, for UK property, HMRC uses the gross rating value as the measure of annual value, a practice retained after the General Rate Act 1967 was repealed in the interests of continuity. Gross rating values are historic and typically low relative to modern rents, which is why the second layer of charge exists.

The additional charge on expensive property, section 106

Where the cost of providing the living accommodation exceeds £75,000, section 106 ITEPA 2003 applies and adds an "additional yearly rent" on top of the basic charge. HMRC states the formula as:

ORI × (C − £75,000)

where ORI is the official rate of interest prescribed by the Treasury, taken at the rate in force at 6 April for the tax year in question, and C is the cost of providing the living accommodation. The official rate of interest is 3.75 per cent from 6 April 2026. HMRC has said the rate is now reviewed quarterly rather than annually, so confirm the rate in force for the year you are computing.

Cost, for this purpose, includes improvements to the property. HMRC guidance is clear that improvements mean additions and extensions and do not include normal repairs and maintenance such as re-roofing. There are further rules on how cost is measured where the provider has held the property for a long period, and on connected persons involved in providing the accommodation, so the exact C figure for an older holding is a computation worth confirming with an adviser rather than assuming the purchase price.

How the charge is reported

The cash equivalent is employment income, reported on form P11D (or payrolled if the company has registered to payroll benefits), taxed on the director at their marginal Income Tax rate. The company pays employer Class 1A National Insurance on the same cash equivalent at the employer rate of 15 per cent. Ancillary services the company pays for, such as heating, lighting, cleaning or repairs beyond the landlord's normal obligations, are separate benefits with their own valuation rules and are not swept up in the accommodation figure.

Charging market rent instead

The clean way out of the benefit charge is for you to pay the company a full market rent under a proper lease. Rent you pay is deducted in arriving at the section 105 cash equivalent, and a rent equal to or above the statutory measure reduces the basic charge to nil.

Doing that properly means a written lease at an evidenced market rent, actually paid in cash on a regular basis, with the company accounting for the rental income as taxable profit. It is not a book entry. The full mechanics, including how to evidence the rent, what the company does with the income, and where market-rent arrangements go wrong, are covered in charging market rent to your own property company. Note that market rent solves the benefit-in-kind problem but does not fix the ATED position, because the ATED rental-property relief needs an unconnected tenant as well as a commercial rent.

Does ATED apply if I live in the property?

If your company (a non-natural person) holds a UK residential dwelling worth more than £500,000, the Annual Tax on Enveloped Dwellings is in scope and the annual charge is payable unless a relief is claimed. Occupation by a director or a connected person is the textbook reason the rental-property relief fails, because that relief requires the dwelling to be let on a commercial basis to someone unconnected with the company.

The bands, rates, valuation dates and filing mechanics are not repeated here. See our complete ATED guide for 2026/27 for the charge itself, the ATED relief clawback on occupation by a non-qualifying individual for what happens when a previously claimed relief is broken by occupation, and ATED relief for related persons and the market-rent test for the full relief analysis.

The section 455 angle: when "rent" becomes a director's loan

The benefit-in-kind charge and the section 455 charge are different taxes on different things, and directors routinely conflate them. The benefit charge taxes the value of occupying the property. Section 455 CTA 2010 taxes an overdrawn loan balance owed by a participator to a close company.

The two collide when rent is charged on paper but never paid. If the company invoices you rent and you do not pay it, the unpaid balance is a debt owed by a participator, which sits in your director's loan account. If that balance is still outstanding nine months and one day after the end of the company's accounting period, the company pays the section 455 charge on it at 35.75 per cent for balances arising on or after 6 April 2026 (33.75 per cent before that date). The charge is refundable once the loan is repaid, but the cash leaves the company in the meantime.

It is entirely possible to face both charges at once: a below-market rent leaves a residual benefit charge, and the unpaid portion of the rent that was charged builds an overdrawn loan account. The background mechanics of loan accounts are covered in our director's loan account guide.

Can I rent a flat through my limited company?

The same code applies when the company takes a lease rather than owning the freehold. Under section 105, the basic charge is the greater of the annual value or the rent paid by the person providing the accommodation. Where the company rents a flat at £2,000 a month and lets you live in it rent-free, the measure is the £24,000 the company pays, not the historic gross rating value. Company-rented accommodation is therefore usually a worse outcome than company-owned accommodation, because the rent the company pays is a current market figure.

A company-owned buy-to-let that a director moves into is the same analysis again, with the added complication that the property was almost certainly bought with a limited-company buy-to-let mortgage that forbids it.

Mortgage and lease breach: check this before anyone moves in

Limited-company buy-to-let mortgages are unregulated business loans. They sit outside the Financial Conduct Authority's regulated-mortgage regime specifically because no borrower, director or close relative occupies the property. Occupation by a connected person changes the character of the lending, which is why the standard conditions on most limited-company buy-to-let products prohibit it, typically as an event of default entitling the lender to demand repayment.

Policies vary between lenders and products, so do not treat any single lender's position as universal and do not rely on a broker's summary. Read the facility agreement, and if the arrangement is still what you want, seek written consent before anyone moves in. One thing worth noting rather than fearing: if the director occupies under a formal tenancy rather than a bare licence, that tenancy carries the ordinary statutory rights of any tenant, deposit protection and notice requirements included, which cuts against the informal "it is my house anyway" handling this arrangement usually gets. There are two further practical checks: the buildings insurance is almost certainly written for a let property and may not respond to an owner-occupier claim, and if the property is leasehold, the headlease may restrict subletting or occupancy in ways an intra-group arrangement quietly breaches.

Comparison: rent-free, below-market rent, full market rent

Route	Benefit-in-kind exposure	Section 455 exposure	ATED relief eligibility
Rent-free occupation	Full charge: annual value plus 3.75% of cost above £75,000, taxed on the director, Class 1A at 15% on the company	None from the rent itself (no rent is charged, so no debt arises)	Rental-property relief fails; charge payable or previously claimed relief clawed back
Below-market rent	Reduced basic charge (rent paid is deducted); section 106 additional charge computed separately	Arises if the rent charged is not actually paid and sits unpaid in the loan account past 9 months after year end	Rental-property relief fails; a commercial rent to an unconnected tenant is required
Full market rent, paid in cash	Basic charge reduced to nil where rent paid at least matches the statutory measure	None where rent is genuinely paid on time	Still fails while a connected person occupies; the tenant must be unconnected

Worked example: a director in a £600,000 company flat

A property company owns a flat that cost £600,000. The sole director owns 100 per cent of the shares and moves in on 6 April 2026, rent-free, for a full tax year. No improvements have been made. The gross rating value used as the annual value is assumed here at £2,400; the real figure for any given property must be established from the rating records, so treat this line as illustrative rather than typical.

Component	Computation	Amount
Basic charge (s.105)	Annual value, no rent paid by the director	£2,400
Additional charge (s.106)	3.75% × (£600,000 − £75,000)	£19,688
Total cash equivalent	Reported on the P11D	£22,088
Director's Income Tax at 40%	Higher-rate taxpayer	£8,835
Company Class 1A NIC at 15%	On the cash equivalent	£3,313
ATED	Dwelling above £500,000, relief fails on occupation	Annual charge for the band (see the ATED guide)

The combined Income Tax and Class 1A cost is roughly £12,148 before ATED, for a flat the company already owns outright. Compare that with the market-rent route: if the flat lets for £2,000 a month, the director pays £24,000 of rent from post-tax income, the benefit charge falls away, and the company picks up £24,000 of rental income taxable at corporation tax rates. Neither route is cheap. The reason this comparison matters is that most directors arrive assuming rent-free occupation is the free option, and on a property of this value it is the one that produces the largest annual tax bill relative to cash actually changing hands.

The structural question sitting behind all of this belongs to the wider decision about what the company should hold. Our property SPV and company structure hub covers where residential holdings do and do not belong inside a company.

What to do before anyone moves in

Five checks, in order. First, read the mortgage conditions and the buildings insurance, because a breach there is immediate and commercial rather than a tax bill arriving later. Second, get the property's rating value and its cost for section 106 purposes, so you know the size of the annual benefit charge before you commit. Third, look at the exit as well as the occupation: private residence relief is a relief for individuals, so a company selling a dwelling its director lived in gets no equivalent shelter on the gain and pays corporation tax on the whole of it. That is an adviser conversation to have before the company buys, not after. Fourth, establish the ATED position: value against the relevant valuation date, and check whether a relief has already been claimed that occupation would break. Fifth, price the market-rent alternative properly, including the corporation tax the company will pay on the rent. If the company has not bought yet, the acquisition cost matters too: a company buying a dwelling pays SDLT at company rates, and the flat 17 per cent charge on higher-value dwellings is covered in our guide to the flat-rate SDLT charge and its ATED interaction.

Living-accommodation valuation has enough moving parts (the cost rules for long-held property, connected-person provision, part-year apportionment, ancillary services) that the framework above should be treated as the shape of the answer rather than a substitute for a computation on your facts. Confirm the numbers with an adviser before filing a P11D on them.

Sources

• HMRC Employment Income Manual EIM11401: living accommodation, general
• EIM11431: computing the cash equivalent where cost is £75,000 or less
• EIM11480: the additional yearly rent where cost exceeds £75,000
• EIM11366: exemption for directors
• HMRC official rates of interest
• ITEPA 2003 Part 3 Chapter 5, sections 97 to 113
• ITEPA 2003 section 68: material interest in a company