A new garden office?

March 23rd 2021

Something that many people have discovered during lockdown is that it is possible to work effectively from home. But perhaps you are now keen to create a more permanent work space at home and are thinking of investing in a garden office. What are the key things to consider and are there any tax implications? Brona MacDougall weighs up the benefits and the implications.

The rising cost of trains, congestion on the roads and the benefits of a more flexible approach to work have made you think about an office in the garden before, but you have never been sure it could work. However, the lockdowns have forced you into remote working and proved that it can. So now you want to invest in a more comfortable office space at home.

The benefits of a garden office
While adapting the interior of your home is one option, there are certain benefits to having a garden office, that’s if you have the space. These include:

No planning
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 start though.

A degree of separation
On a very practical level, having a space that is separate from your house also means you can separate your home and work life more easily. The benefits of this should not be underestimated.

How much might it cost?
You can spend anything from £3,000 for a mini office which will only fit a desk and chair to around £30,000 for something much larger and more elaborate, perhaps even having a log burner. Buying a modular kit means that you know what the costs are up front, and prices will often include everything from the foundations to lighting and flooring and in some cases even the internal decoration.

You’ll also need to think about how to heat and light the office as well as insulation. Having running water also needs to be factored in. And you should think carefully about where to site the office as you’ll want as much natural light as possible.

With pre-fabricated offices you will cut costs by about 25% if you are able to put it together yourself. Some firms offer to part-build it, which will save you about 10%.

But what are the tax implications?
Firstly, you’ll need to consider the best way to deal with this kind of investment, as well as the ongoing costs. Here are a few of the main things to consider:

None of the costs of a DIY construction or the purchase price of a ready-made office are deductible from your business profits as an expense. This includes design, delivery charges, initial decoration and so on. However you may be able to claim Structures and Buildings Allowances at 3% of cost as a capital allowance against your profit.

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 and so on 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, provided you are a VAT registered business. As usual, you must ensure there is a VAT invoice addressed to the business to support any claim.

Garden offices for homeworking often require no planning consent. The return on investment is quick given reduced commuting costs. Although the cost of a garden office is not deductible from your business profits, VAT can be reclaimed. Running costs, plus furniture, repairs and so on are subject to the usual tax deductions.

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