Finding peace and quiet when working at home can be difficult, especially when the children are around. I have been giving some thought to building a dedicated garden office so that I can focus more on my work. Would I be able to offset the cost of building and kitting out an office such as this, against my profits?
The following response applies only if you are a sole trader or are in partnership. The rules are different for those trading as a limited company.
Due to the large amounts of money you would spend on developing a home/garden office, it is recommended that you seek professional advice on the matter so that you benefit from all tax relief available, and do not stray from the rules.
Having said that, building a garden office or converting an existing room is a capital expense, and as such, attracts tax relief in the form of capital allowances on ‘integral features,’ equipment used in the course of business, and any fixtures.
So what does ‘integral features’ mean? They might include these systems:
Hot and cold water
- Air conditioning
- External shading from the sunYou also need to consider whether there would be any private use of the space. If you moved house or ceased trading, a balancing adjustment would be needed and you could then deduct the capital cost of the building.
You should be able to recover the VAT paid if you are VAT-registered, but under certain circumstances you may have to repay the VAT, if you de-registered for example, or if you sold your property. This amount would be based on the condition of the construction and the price that might be achieved for it.