Have you considered a garden office?

You can pay for a garden office through your limited company, but it isn’t a tax-deductible expense. You can’t claim tax relief for spending on the building, foundations or structure. However, you can use your business’s capital allowance for furniture and equipment. You could claim for installing power for lighting, heating, ventilation and computers, for example. Other items you can claim for include: 

 

You can claim running costs for your garden office such as heating and lighting as allowable expenses. You might need separate meters or claim a reasonable allowance against your home’s running costs. 

 

You can reclaim VAT you pay for a garden office if your company is VAT-registered and not using the flat rate vat scheme. 

 

However, you can’t claim the full amount if you use your garden office for both personal and business purposes. If this applies, also find out about paying tax for personal use as a benefit in kind or BIK. 

 

If you are using the flat rate VAT scheme you can claim for goods you buy included on one receipt over £2,000. The rules don’t cover personal use, so you won’t have to split personal and business use for the goods. However, you can’t claim for services, such as employing a builder. Make sure you ask your suppliers to show goods and services clearly on their invoices. 

 

Generally, outbuildings including garden offices don’t need planning permission. However, the rules include size, height and location so it’s important to check with your planning authority. 

 

If you plan to work alone on your computer in your garden office most of the time business rates probably won’t apply. However, if you regularly see clients for beauty treatments, for example, you might pay business rates. It’s important to check in advance because each case is different. You might qualify for small business rate relief. 

 

The Capital Gains Tax or CGT position isn’t straightforward. If you only use your garden office for business and later sell your property, you’ll pay some CGT. If you also use your office as a gym or for social events CGT might not apply. However, you can’t then fully claim VAT and tax relief. One option you might consider is a formal lease agreement between your family and your business. You could ‘rent’ the office which is an allowable business expense (but also income for a family member). 

 

Deciding whether a garden office works for you involves quite a few things. It’s best to take a long-term view of the pros and cons.