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Can My Garden Office Be Claimed as a Business Expense?

Jul 3, 2020 | Helpful Guides | 0 comments

Are you considering the addition of a garden office to help you work from home? This is a great idea for many reasons. You can have privacy and quiet to stay focused and productive, while keeping disruptions from family to a minimum. And the garden office can even be used for other purposes, such as a spare bedroom for guests and more. But is it possible to claim a garden office as a business expense?

There’s no definitive answer, because there are some variables to consider. Let’s take a look.

What are the Pros and Cons of Having my Garden Office as a Company Asset?

When it comes to having more space for your work, there are many pros. And if you’d like to claim your garden office as a company asset, that is possible. For tax purposes, if you’re VAT registered, it is possible to claim VAT back from the cost of the garden office, which is a nice option when you consider the cost of the building.

If You’re a Sole Trader…

This is a little bit different. If the garden office space is used for personal reason, you can only claim a percentage of VAT. Say you use the garden office for work during the week, and then you use it as a gym on the weekend. In this example, you would be using the room for personal use about 10% of the time, so you can only reclaim 90% of the VAT.

What If the Garden Office is Used as a Guest Room?

In this case, there shouldn’t be a problem. If the garden room is in your company’s name, then there’s no issue. However, if you’re a sole trader, make sure that you can prove the garden office’s main use is as an office and is not used for any other purpose.

Are There Other Costs That Can Be Claimed Back?

Other than VAT, it’s not possible to deduct the garden office as a business cost. However, you can deduct the fixtures, fittings, office furniture, and more.

When it comes to electrical work, this can also be reclaimed. For this, however, you must receive and safe the itemized bill for all the costs from the electrician(s) who performed the install.

Can Utility Bills Be Deducted?

If your garden office has a separate meter, then you can deduct the cost of the utilities in full. However, if not, then you’ll need to calculate an estimate based on your use of the room. Further, if this isn’t possible, you’ll need to determine the amount to be deducted as a percentage of use.

This is similar to when you work from home. For instance, if your home has 3 rooms, and you work from one room, then you can claim 33% of your electric and gas bills.

Garden Office—Will I Need to Pay Capital Gains Tax if I Sell My Home?

What happens if my garden room is a company asset? In this case, there should be no issue. This is because the garden building has no value. In fact, it’s value will decrease over time. However, the garden room can increase your entire property’s value, but if you sell your home, you should not have to pay Capital Gain Tax.

One note—it is important to check with your local council and ask about business rates. Check to see if there are any, if they apply to a garden office, and how much they would be.

Is the Garden Office Connected to the Value of the Business?

While the garden office will go on the balance sheet (for the price to build it), you can’t write off the cost. As noted earlier, you can claim the fittings and furnishings as a business expense. Otherwise, it is an asset, but that’s about it.

However, if the garden office is destroyed for some reason, you can claim it as a capital loss.

In Conclusion

If you’re a sole trader or have a company, is it still a good option to buy a garden office through the business? The answer is a resounding yes! However, when it comes to taxes, there are some very complex rules and other considerations that can vary depending on each person’s situation. So, it’s advisable to consult with a professional tax service or your accountant for specifics on how the addition of a garden room could affect your business.

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