-How a new garden office can impact your tax bill
This year has caused us to reimagine and transform how we work. With the introduction of work from anywhere policies, necessary risk assessment for office spaces and much more to come in 2021 – a garden office can be an attractive option.
We’ve learnt that working from home is an option, and a garden office could be a welcome solution to piece-meal office spaces on kitchen tables and the like. In this week’s blog we’re examining the pros, cons and financial implications that can arise from installing a garden office.
‘Good Thymes’ from a garden office
If you have the space to build a garden office there are some immediate benefits, namely:
No planning permission
Whether you are buying a ready-made office or building one from scratch, it’s unlikely that you will require planning permission. Check with your local authority before you get the hammer out though.
A garden office builds a separation from your home, creating a divide between your home and work life. The physical distance helps create separation in your mind.
A garden office can be erected from £3,000 which would include a desk and chair. However, spend could vary up to £30,000 delivering a more elaborate space for staff too. A modular kit (such as a log cabin) is a good option as it provides all cost up front.
For any building project make sure the price includes everything from the foundations, lighting, flooring, heating to electrics. Water, light and insulation are key considerations – running water must be factored in. Prefabricated offices can cut costs by about 25% if you put it together yourself. Some firms offer to part-build it, which will save you about 10%.
Will a garden office ‘cut’ my tax bill?
A little bit of planning is the best way to deal with this kind of investment as well as factoring in the ongoing costs. Garden offices for home working often require no planning consent. The return on investment is quick given reduced commuting costs. Although the cost of it isn’t deductible from your business profits, VAT can be reclaimed. Running costs plus furniture, repairs, etc. are subject to the usual tax deductions.
Here are a few pointers:
- None of the costs of a DIY construction or the purchase price of a ready-made office are deductible from your business profits. This includes design, delivery charges, initial decoration, etc.
- The normal tax rules apply to the cost of furniture, fixings, etc. which you add to the structure. This means you can claim a deduction for capital allowances
- 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
- Where the cost of furniture etc. is within the annual investment allowance, the whole amount qualifies for a tax deduction for the financial year in which it is incurred
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. As usual, you must ensure there is a VAT invoice addressed to the business to support any claim.
Overall, there are a number of factors to consider if a garden office is the best option for your business and now is the prime time to review work space. If you are interested in learning more about this get in touch with us to see how a garden office could benefit your overall financial plan and budget.