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Converting garage to an office - business expense?

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    Converting garage to an office - business expense?

    I know that this has *sort of* been asked before viz-a-vis spare bedrooms, sheds and conservatories. And, no, I didn't do a search (ok NLUK, so shoot me!).

    If I convert my garage into an office space, just an office, not a spare room, would any accountants like to comment on whether this could be a legitimate business expense, as it would honestly be wholly-and-exclusively used for business. No, the house is not a registered business address nor do I pay business rates. The house is unlikely to be re-sold at any time in my lifetime, more likely to be bequeathed.

    Views? Comments? (n.b. posted in professional to avoid abuse).

    And yes, this is a serious question. TIA

    P.S. Of course I'll ask my accountant, but it's always interesting to hear people's views.

    EDIT: posting this as self-employed, not as a limited company (on behalf on GFP actually).
    Last edited by Platypus; 5 January 2016, 21:30.

    #2
    You would be improving a personal asset and as such would not be allowable in my opinion.

    Not wanting to sell the property anytime soon has no impact as you could potentially remortgage or refinance against the property which will likely increase in value as a result of the changes.

    As such I would recommend carrying out the conversion personally and then the company could buy the business related furnishings such as desk and chair, provided they are for business use.

    Comment


      #3
      Originally posted by Kenny@MyAccountantFriend View Post
      You would be improving a personal asset and as such would not be allowable in my opinion.
      ^ Makes complete sense. Thanks!

      Comment


        #4
        Yes agree with Kenny.

        If it's a fixed structure on your personal property, in my opinion, this would not be allowable.

        If however it was a moveable structure (wooden cabin), this could be argued!

        Comment


          #5
          I asked my accountant about something similar - he said the taxable benefits compared to the long term issues of your ltd having a part share in your home aren't worth the hassle.
          The greatest trick the devil ever pulled was convincing the world that he didn't exist

          Comment


            #6
            fwiw I converted an attached cowshed in a previous property.

            I paid the construction etc personally. However anything vaguely business related went through. Electric (own ring main/box), safe, furniture, heating.

            In simple terms I paid for the structure, the business paid for everything to make it an office.

            Taxman was fine with it during investigation, but did want sight of some things (e.g. a slate top from the local memorials company which was part of the safe installation).

            Comment


              #7
              Originally posted by Platypus View Post
              I know that this has *sort of* been asked before viz-a-vis spare bedrooms, sheds and conservatories. And, no, I didn't do a search (ok NLUK, so shoot me!).

              If I convert my garage into an office space, just an office, not a spare room, would any accountants like to comment on whether this could be a legitimate business expense, as it would honestly be wholly-and-exclusively used for business. No, the house is not a registered business address nor do I pay business rates. The house is unlikely to be re-sold at any time in my lifetime, more likely to be bequeathed.

              Views? Comments? (n.b. posted in professional to avoid abuse).

              And yes, this is a serious question. TIA

              P.S. Of course I'll ask my accountant, but it's always interesting to hear people's views.

              EDIT: posting this as self-employed, not as a limited company (on behalf on GFP actually).
              Your business can rent an office if it requires one in the same waythat any other business can do so. The rental income you accrue will be taxed though, and it is up to your accountant to tell you whether it makes any sense financially. Also, there may be implications from the pov of capital gains tax on the portion of your home that is used exclusively for buainess (if any) when you come to sell your house, again ask your accountant.

              Boo

              Comment


                #8
                As a self-employed individual you can offset the expense of an office.

                I doubt you'd be able to offset your building costs as that is generally treated as capital expenditure. As others have mentioned your expenditure has increased the value of your property, which you own as an asset and therefore you haven't incurred any costs you can offset against tax, but you can make a charge against your income for the use of your converted garage.


                https://www.gov.uk/expenses-if-youre...loyed/overview

                If you work from home

                You may be able to claim a proportion of your costs for things like:

                heating
                electricity
                Council Tax
                mortgage interest or rent
                internet and telephone use
                Last edited by BlasterBates; 9 January 2016, 10:06.
                I'm alright Jack

                Comment


                  #9
                  @Louise - This:

                  CA22110 - Plant and Machinery Allowances (PMA): buildings and structures: shelters, huts and so on

                  says:

                  "Prefabricated buildings are not plant even if they can be taken down and re-erected somewhere else (St. John's (Mountford and another) v Ward 49TC524). In the St John's School case the school claimed plant or machinery allowances on a prefabricated gymnasium and laboratory. The capital allowance claim was rejected. All that the gymnasium and laboratory did was provide housing in which the school's activities could be carried on. They were not apparatus with which the school's activities were carried on. The buildings contained plant but that was not enough to make the buildings themselves plant."

                  Does that mean that if OP was to buy a prefabricated building as an office they could buy it through the company, but wouldn't be able to claim against corp tax? I was looking at a prefabbed building, the cost of which would run to about £21k, so even if I could only get the VAT back, that's still a MASSIVE saving.

                  It's from these guys if it makes any difference, and their key selling point is that it CAN be moved from place to place if needs be.

                  Garden Offices UK | Garden Cabins | Garden Outhouses | Booths Garden Studios
                  And the lord said unto John; "come forth and receive eternal life." But John came fifth and won a toaster.

                  Comment


                    #10
                    I'm shopping around for a garden office and have researched this to death and have finally decided to finance it personally and kit it out on the company.

                    The biggest saving to be made is on the VAT of course even in the flat rate scheme as long as you can get the invoice itemised as you can only reclaim the VAT on capital goods over £2k on the FRS, not any services like installation.

                    But there are complications - the building itself would be an asset and not an allowable expense for corporation tax. It also wouldn't qualify as plant and therefore capital allowances - I've seen a few accountants and garden office companies (I've looked at Booths myself) make this claim but simply being possible to move it does not make it plant, if it's clearly intended to be a permanent structure it's not plant. It would have to be something that is intended to be moved on a regular basis, like a portakabin for example. Seems like trying to pass it off as plant is a big risk to me. Don't get tax advice from garden office companies!

                    And then there's the BIK issue. The construction of any kind of structure at the main residential property of a company director is automatically treated as a BIK, even if the primary use is for business.

                    And then there's the implications when you sell your house. There may be CGT implications. And if you aren't going to move the office, YourCo will need to sell the office to the purchaser of your house and it will need to charge VAT.

                    There's also a small risk with business rates. If you own it personally there is still a risk but I think there's an increased chance of it being liable if it's owned by the business (just speculation on my part).

                    It all just gets really messy.

                    Comment

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