Can my limited company pay rent to my spouse for a home office in our house?

Yes, this can be done, but it needs to be a genuine commercial arrangement, not simply a way to move money out of the company. Your spouse, as sole owner, can grant the company a licence to use the spare room, and the company can deduct rent that is wholly and exclusively for its trade, provided the amount is reasonable. Base it on something you can show: the room's share of the house, a proportion of mortgage interest (not capital repayments), council tax, utilities and insurance, or a comparable market rent for a similar room, adjusted for the days and hours it is actually used.

On your spouse's side, the rent is generally taxable as property income, even if the amount is modest. They will need to keep records and declare it, usually through self-assessment, after deducting allowable property expenses. The £1,000 property allowance may reduce or remove tax in a low-rent case, but it does not automatically make the income invisible. Rent-a-Room relief is unlikely to help here, because this is a business letting to a company rather than letting furnished residential accommodation, so do not rely on its £7,500 limit.

There are wider risks to check before you start. If the room is used exclusively for business, a proportion of the house may lose private residence relief for capital gains tax when you later sell, which can be a much larger cost than the annual rent saving. Check business rates, insurance and mortgage consent as well. A formal written licence helps: it should identify the room, the permitted hours, the rent and payment dates, who pays which bills, and that it does not create a tenancy. Pay by bank transfer and keep the licence, calculation, bills and payment records together.

Compare this with the simpler homeworking route. The company can pay you, as an employee or director working from home, a flat-rate amount of £6 per week without detailed evidence, or reimburse actual additional household costs with evidence if they are higher. That route avoids creating property income for your spouse and avoids the capital gains risk, but the amount is much smaller. Rent is only worth the extra paperwork and risk if the reasonable, documented figure is materially higher and you have taken advice on the capital gains and mortgage points first.