Tax Relief: Building a Home Office

Tuesday 2 March 2021

Written by Lee Manning

Tax Relief: Building a Home Office

Tax Relief: Building a Home Office

I’ve been asked so many times now about either converting a garage or shed into an office or putting a new office as an outbuilding at home, as there are some amazing designs out there that make working from home a very pleasant working environment! 

So, what are the tax consequences? 

Well, the bad news is that if you decide to build a new outbuilding as an office yourself or get someone to do it for you, you cannot claim the cost against your business profitseven the design costs, as it is classed as an improvement to the property. The only good news is that any cost of furnishing the office and thermal insulation is allowable, and you can claim capital allowances against your business profits. 

Running costs, the cost of heating and lighting the office, is tax-deductible, as is the supply of water if it’s separately metered from your home. Repairs, including redecoration costs, are also tax-deductible.  

However, there is some good news in respect of VAT, as the VAT rules regarding structures differ from those for income tax and corporation tax. It can be reclaimed on not just the running expenses, but also the cost of building your own or buying a ready-made office. You must ensure there is a VAT invoice addressed to the business to support any claim, as per the usual VAT rules. 

You do have to watch out for any personal tax where the office outbuilding is not used wholly and exclusively for business, as there could be a benefit in kind tax charge say for example it is used by family members. 

To conclude, if you are thinking of working from home and spending a few quid on the “office” the taxman is not going to help you very much... so might be worth converting that old garage into a nice man cave!! 

If you would like to discuss any aspect of this article or for any other tax, business or accounting advice, don't hesitate to get in touch today.

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