Building an office at the bottom of your garden can be an excellent solution if you're looking for a separate workspace. As remote working becomes increasingly common, having a garden-based home office can provide a quiet and private area for essential calls and concentration. According to the Office for National Statistics, around 46.6% of employed people did some work at home in April 2020. Additionally, a report from Microsoft and YouGov in February 2021 suggests that UK workers are generally happier working from home.
However, before you get started, it's crucial to understand the accounting and tax implications of having a garden office. While you can claim tax relief on furniture and equipment you put inside your office, claiming tax relief on the structure itself requires more work.
Here are some key points to consider when claiming tax relief on your garden office structure:- You can't claim any tax relief on the structure itself, including planning, foundations, and building.
- You can claim tax relief on furniture and equipment you put inside your office, as you would if it were an office inside your home.
- You can claim tax relief as a capital allowance on certain fixtures, fittings, and services to make your structure suitable for your work, such as electrics, plumbing, insulation, etc. You can also claim for ongoing running costs.
- You can claim the VAT back on the costs, but you will need to make adjustments if there is any personal use of the building. Invoices you wish to claim would also need to be made out to your company rather than to you in person.
- If you rent the space for any other business use, you must pay tax on the rental income.
If you plan to sell your home, there are a few other tax-related factors to consider. You may need to pay Capital Gains Tax (CGT) when you sell your property if your home office structure hasn't been used for personal use. The amount of CGT you could pay would be proportionate to the land your structure covers. Principal Private Residence (PPR) relief is exempt from CGT.
At Ellacott Morris, we offer invaluable advice and support whether you're considering creating an office in your garden or already working in this way. Our team of taxation experts can help you make the best decisions for your business. Please feel free to contact us today to find out more.
Source:
* Office for National Statistics (ONS)
** Microsoft and YouGov report
