With an increasing number of employees opting to work from home, people may be wondering whether their limited company can cover the cost of a garden office. This refers to a separate space designed specifically for work purposes. We have shed some light onto some frequently asked questions.
Will my company receive tax relief for a garden office?
As a garden office is considered a structure, it is not the usual practice to claim tax relief. However, tax relief could be achieved through capital allowances on equipment installed in the office. Running costs such as electricity, gas and water can also be claimed as a business expense.
Can VAT be reclaimed from garden office costs?
If you are working for a VAT registered company, you can claim VAT on the building costs of your garden office. However, using the space for personal use may come at a cost and result in a lesser VAT claim.
Other considerations: Benefits in Kind
If your garden office is also used for personal use and was paid for by your company, it may warrant a taxable benefit in kind. Your Client Manager will be able to answer any questions on this.
Other considerations: Capital Gains Tax (CGT)
This only needs to be considered if you are intending to sell your property. If your garden office is used solely for business, part of your gains upon sale of the property could be subject to CGT. This is not the case if it is used for both personal and business matters.