Leeway with 'wholly and exclusively for business use' regarding furniture?

[northernladuk]

Does having a garden office (not just an outside toilet or "little shed"), with electricity and internet connection affect the value of a property?

In this day of WFH and done properly then hell yes. The amount will depend on the existing property and the quality of the office (i.e. wood building or fully insulated things you can buy) but either way at very worst it's cost neutral. The cost of the office will add the same to the property but then factor in percentage increase on the enhanced property price then it makes money.

If there is ample room already and it's a nice to have then it will trend to cost neutral. If it is a new quality 'room' the existing property doesn't have then absolutely. It adds an extra useful room to a house and that 'cool' factor some people like. It's the type of thing that hits the title '3 Bedroom property with outside office' type thing.

[WTFH]

A little shed-office isn't 'property' though really is it, it's more like a greenhouse or static trailer?

If people here are talking about having extensions built that's very different.

Does having a garden office (not just an outside toilet or "little shed"), with electricity and internet connection affect the value of a property?

[d000hg]

Why would you depreciate it? Have you seen the price of sheds at the moment, it's appreciated in value if anything.

Freecycle and FB marketplace is full of people giving away old sheds. Like snooker tables and large home gym equipment, their resale values tend to plummet due to sheer inconvenience.

Agreed - which is why I'm challenging the assumption that spending out on a shiny garden office and then claiming it's worth a fraction of that when you sell, even though property prices will most likely have gone up, is 'creative accounting' at best but most likely fraudulent.

A little shed-office isn't 'property' though really is it, it's more like a greenhouse or static trailer?

If people here are talking about having extensions built that's very different.

[Fred Bloggs]

Because everyone is letting the tax/greed tail wag the dog. When you are looking for a way to cheat the tax man common sense and facts often go out the window.

Correct. That's why gobbing off to your mates in the local coffee shop about how your partner's business has paid for the shiny new garden room is a bad idea. You really don't know who is overhearing the conversation and what they might do with that information.

[northernladuk]

Agreed - which is why I'm challenging the assumption that spending out on a shiny garden office and then claiming it's worth a fraction of that when you sell, even though property prices will most likely have gone up, is 'creative accounting' at best but most likely fraudulent.

Because everyone is letting the tax/greed tail wag the dog. When you are looking for a way to cheat the tax man common sense and facts often go out the window.

[ladymuck]

the point of depreciating an asset is more about it's value when you 'dispose' of it though.
Not valid for a shed I grant you.

Agreed - which is why I'm challenging the assumption that spending out on a shiny garden office and then claiming it's worth a fraction of that when you sell, even though property prices will most likely have gone up, is 'creative accounting' at best but most likely fraudulent.

[Lance]

Why would you depreciate it? Have you seen the price of sheds at the moment, it's appreciated in value if anything.

I don't understand why posters here are working on the assumption that every asset falls in value over the period of ownership when they're happy to invest in shares, rare wines, cars on the expectation that they will appreciate in value.

I suppose the same posters are forgetting that depreciation expense is not allowable for CT which is worked out on profit BEFORE depreciation, so you're not going to reduce a tax bill by claiming your £50k garden shed has lost 50% of its value this year.

the point of depreciating an asset is more about it's value when you 'dispose' of it though.
Not valid for a shed I grant you.

Some businesses use asset values to inflate the value of the company artificially (either to help a sale, or just to stay solvent). Years ago I had a trawl through my then employers assets. Most if was stolen BT NTE units and 10 year old Cisco routers, all valued at £1k each. Suffice to say that the solvency of the company based on that didn't help when they didn't pay the staff pension fund.

[ladymuck]

Funny thing. Bloggs estate had a garden room installed about three years ago. It's basically just used as a posh shed. But it's far better looking than a basic shed. Nonetheless, today, the exact same timber building would be at least 2x what we paid for it. Might have a hard time explaining how it has depreciated when it's still in perfect condition?

Why would you depreciate it? Have you seen the price of sheds at the moment, it's appreciated in value if anything.

I don't understand why posters here are working on the assumption that every asset falls in value over the period of ownership when they're happy to invest in shares, rare wines, cars on the expectation that they will appreciate in value.

I suppose the same posters are forgetting that depreciation expense is not allowable for CT which is worked out on profit BEFORE depreciation, so you're not going to reduce a tax bill by claiming your £50k garden shed has lost 50% of its value this year.

[Fred Bloggs]

Assets can appreciate as well as depreciate. Not everything reduces in value over the course of the time you own it. It's highly likely that a property asset would increase rather than decrease in value over the period it is owned.

You would need to revalue the property on an annual basis, just like you revalue your computer equipment by running depreciation journals.

With something like property an assessment would be done against the actual sale price of comparable properties in the area. IANAA but I would look at the whole property (office + dwelling) value and compare the change in value since date X when the office was built. Then attribute the change in value according to sqft so if the office is only 5% of the total sqft of the whole property then its value is adjusted by 5% of the total change in value (it makes sense in my head but I may have explained badly).

Funny thing. Bloggs estate had a garden room installed about three years ago. It's basically just used as a posh shed. But it's far better looking than a basic shed. Nonetheless, today, the exact same timber building would be at least 2x what we paid for it. Might have a hard time explaining how it has depreciated when it's still in perfect condition?

[WTFH]

What are the guidelines for assessing if its depreciated or appreciated

Continuing with the example of a garden office, should you have it for over a decade or even two and it were to fall into a condition where is was no longer viable as an office. Can you make your own assessment of its value?

Or sell it back to yourself at a price the company was happy to accept?

Are you saying you'd waste your company money on it, then when it was unusable you'd have it valued at zero?

Your new accountant should help you on how to depreciate assets, but you need to record your assets on your books until such times as they are written off/sold. So you can't spend £100k today on a garden office and leave it on your books for 10 years at £100k, then write it off in year 11 as zero value.
If you're thinking of going down a route of conducting long-term fraud, then be very careful. Few accountants would sign up to help you with it.