Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

Readers' forum : Cheap housing

31 October 2017
Issue: 4622 / Categories: Forum & Feedback

Tax implications of a limited company building a house for its shareholder.

My client operates a building business through a limited company of which he is the director and shareholder. He acquired a plot of land and has built a house on it. The possible complication is that the house was built by employees and subcontractors working for the limited company.

My client paid the company for the cost of the labour but this was only for the amount that the company in turn paid to its workers. In effect he has acquired a house at ‘cost price’. If the company had been carrying out the same work for a client at arm’s length it would of course have added a healthy premium to ensure that a commercial profit was made.

What are the tax implications here? Presumably the director could make an extra payment to represent the profit to the company. But suppose he does not....

If you or your firm subscribes to, please click the login box below:

If you are not a subscriber but are a registered user or have a free trial, please enter your details in the following boxes:

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this item in full.

Please reach out to customer services at +44 (0) 330 161 1234 or '' for further assistance.

back to top icon