If you’re like the thousands of other people who are now working from home, you may well have considered building a garden office. A garden office will give you peace and quiet away from the interruptions of the main house, as well as creating a natural separation between work and home life. But can you claim your garden office as a business expense? Read on to find out more about home office tax relief.
The build of a garden office, including foundations and materials, is classed as capital expenditure, as it will be expected to last several years. However, it will not qualify for immediate tax relief and isn’t allowable as an expense against business profits.
However, fixtures and fittings do qualify for tax relief through capital allowances, so you can claim for furniture, curtains, shelving, etc. The cost of connecting up power and all your wiring, etc. also qualify, as does thermal insulation.
Running costs, including lighting, heating and water if separately metered, also count towards taxable expenses.
If your company is VAT registered and not using the Flat Rate VAT scheme then you can claim back the VAT on the cost of building a garden office.
However, if you use the space for personal reasons as well as work, then you will only be able to claim back the relevant percentage of VAT. For example, if you use the garden room as an office from Monday to Friday, and then it becomes a games room at the weekends, then you could only claim back 5/7 of the VAT.
If you are using the Flat Rate Scheme, then you can claim for capital expenditure on goods over £2000, with no restrictions on personal use. However, you may only claim for goods rather than services, so it can become a little complicated.
If you buy a readymade timber building to use as an office, for example, then it will count as goods and you will be able to claim the VAT. But if you pay for it to be constructed and utilities connected then that will be considered a service. Be sure to request that the supplier’s invoices are clearly itemised so that it is clear what you are purchasing.
As mentioned, garden office fixtures and fittings count towards taxable expenses. You can therefore claim back the cost of your desk, chair, filing cabinets, carpet, etc.
As well as the costs of fixtures and fittings, you can also claim for the utilities consumed by your garden office. Electricity, internet, heating and phone costs can all be claimed as expenses under the banner of ‘use of home as office’. Limited company and LLP structures as well as sole traders can all claim in this way.
If you install separate meters for your garden office utilities, the full costs can be deducted. Otherwise you will need to calculate the amount used as a percentage from the total amount of your property.
You will only have to worry about Capital Gains Tax if you plan on selling your property in the future.
In most instances, Capital Gains Tax will only apply to more formal permanent brick structures. Whilst your garden office may add value to the sale of your house, the office itself will not be increasing in value. If you are uncertain of the tax position when selling your property, be sure to take independent advice from a qualified professional.
There are many benefits to installing a garden office, not least improved work life balance.
A garden office is just like having an additional room to your home. You can connect electricity, Wi-Fi and air conditioning, plus your home office can be fully insulated, so working in the winter won’t be a problem.
As part of Surrey Hills Garden Buildings end to end service promise, we will ensure that the power for your garden office is fully connected, and we can even help with furnishing and decorating.
Building a garden office is a brilliant way to give you space to separate your work and home life and we would always recommend speaking to your accountant for more detail about home office tax deductions in the UK.
Why not visit one of our dedicated show sites for garden office inspiration? Our family run team is on hand to provide you with friendly, expert advice on creating a garden office that meets all your needs.
You are also welcome to get in touch to discuss your individual garden office ideas. We look forward to speaking to you.