Home office construction project - business asset?

[Grinder]

My company has 2 directors (myself and my wife) we both work at home 2 days a week or more, but the room we have dedicated to this task is too small to accomodate both of us and all our equipment and clients' records.

Looking at my options, I would prefer to have a purpose-built conservatory erected on the back of our house. This would include dedicated storage and workstations, as well as an area to meet with clients which happens 1 or 2 times a week.

Accountant says this cannot be regarded as a business asset, as it will be built on my land and inevitably add value to my house. Hence it would be a benefit in kind, give rise to national insurance and not be eligible for claiming VAT.

Do I need a new accountant?

[Support Monkey]

If i have a company car and i build a garage on the side of my house to put it in can i claim it as a business expense as i only need it for the company car

Rent officer space away from your home you could claim for that

[prozak]

My company has 2 directors (myself and my wife) we both work at home 2 days a week or more, but the room we have dedicated to this task is too small to accomodate both of us and all our equipment and clients' records.

Looking at my options, I would prefer to have a purpose-built conservatory erected on the back of our house. This would include dedicated storage and workstations, as well as an area to meet with clients which happens 1 or 2 times a week.

Accountant says this cannot be regarded as a business asset, as it will be built on my land and inevitably add value to my house. Hence it would be a benefit in kind, give rise to national insurance and not be eligible for claiming VAT.

Do I need a new accountant?

would there be capital gains issues when you sell if you go that route?

[stek]

Could you not finance it personally and rent it to your company?

[Grinder]

This is a great debate!

would there be capital gains issues when you sell if you go that route?

Only if there is a "gain". Presume writing-down allowances will eliminate any potential gain after about 5 years.

If i have a company car and i build a garage on the side of my house to put it in can i claim it as a business expense as i only need it for the company car

Not a great example (cars are made to live outside, aren't they?), but I see your point.

Rent officer space away from your home you could claim for that

Yes true - but it would also be far more expensive, and basically throwing money away. Might as well pay the tax and use the net to build said conservatory.

Could you not finance it personally and rent it to your company?

I like the sound of that, but the rental income would become taxable personally.

[Clare@InTouch]

Cetainly capital expenditure is not allowable in a use of home calculation:

Specific deductions: use of home: introduction

My initial thoughts without spending hours on research....

If the asset is wholly business and you use it personally then you would be subject to a benefit in kind charge.

If you're claiming that the extension is a wholly business asset then there may well be issues when you come to close your business or sell your home. The part of your home that you've claimed is 100% business related would not benefit from Principle Private Residence Relief so would be subject to CGT on sale. Or, when you close the company you'd have to buy that part of your home back from your company.

Capital allowances on buildings are not the same as capital allowances on equipment, therefore it wouldn't be worthless after 5 years. Land and property items are usually not depreciated in company accounts as they rarely lose value, and for tax purposes you'd potentially be looking at Industrial Buildings Allowance or similar at 4% - Industrial Buildings Allowance (IBA): Writing down allowance: Contents

[Clippy]

This is a regular question so, if you haven't already, do a search for 'home office' or 'garden office'.

Recent threads I found are this serious one and this rather humorous one.

Let us know what you decide.

[Grinder]

Thanks for the helpful advice, Clare.

Clippy, thanks for your patience - I did find one of those but the other one I missed and it does seem to spell it out better. There was also a thread about an unattractive garden pod which looked awful and seemed hellishly overpriced.

I think its back to the drawing board on this idea - shame because it really would be business use for at least a few years.