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Tax rules for garden offices

The pros of a garden office are pretty clear for a lot of home workers. Your own dedicated space to work and look out into the garden, less interruptions from family and a safe place to store all your work.

But it can be quite an investment, and for a lot of people the advice regarding the tax rules surrounding them can be quite confusing.

The main point to remember is you cannot deduct the cost of the building itself as a business expense. However the fixtures and fittings within the building can be claimed, so its really important to get an itemised bill with all the costs when getting one built.

The price you pay for the building can be paid via your company, but it will go on your balance sheet when you purchase it. So it wont come off your profits and mean you pay less tax. It will sit on your balance sheet as an asset for the business, but the cost cannot be written off. If it gets blown over in 10 years once its aged then you could claim it as a capital loss.

If you are VAT registered you can claim back the VAT for the entire purchase which can be a big benefit for some.

For sole traders the rules differ to limited companies, sole traders need to be careful to ensure the space is only used for business purposes. If the space is used for personal matters then the VAT reclaim needs to be apportioned. For example if you use the office as a guest room once a week then you would need to reduce the VAT claim from 100% to 80%.

You can also claim you electricity costs for the office. If you have a separate meter for the office then you can deduct this in full without any complications. If not you will need to do an estimate for the usage, similarly to the work from home calculations.

Want to discuss your home office going through your company, book in a call using the button up the top of the page and we’ll be happy to help.

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