Use of home / rental / business purchase - best choice when building extension?

[The Tall Designer]

I’m building a roof extension, with one bedroom and one dedicated office. I work from home 100% and don’t intend to change. The extension is costing £100K, with 40% of that for the office. I will not move house in the next ten years. Am I better off putting the £40K through the business as a purchase or making a rental agreement that the business pays, to me personally, every month?
I’ve got a mortgage that probably says I’m not allowed to have the business own part of the house but I can cross that bridge when I come to it… Any idea how much a fully serviced office with aircon could cost in Brighton per month?

And - any way I can get the Aircon in the new office down as a business expense?

Huge thanks for any help, contracting 14 long years and finally got a proper office, thanks Covid.

[cojak]

Plastic sheeting.

Or maybe the stuff that covers sheds?

IT contractors will offer lots of helpful suggestions, I'm sure.

Edit: Ah - you're wanting expense advice - my bad. Getting your aircon through your books? Probably not.

[malvolio]

Depends if you want to break the terms of your mortgage contract and house insurance, become liable for CT when you sell the house, be liable for business rates and can devise a mechanism to block out that part of the house outside business hours...

In other words, don't be silly. If you want an expensable business space, build it in the garden all by itself.

[ladymuck]

If you want an expensable business space, build it in the garden all by itself.

And for that, there is this:

https://forums.contractoruk.com/acco...n-offices.html

[northernladuk]

So how do you sell the house if most of it is owned by you and a few bricks and a bit of roof is owned by the business?
How you gonna register that at land registry?
If you've got a mortgage do you think they will be happy with half the house owned by someone else?
What's going to happen if you shut the LTD? Knock it down?
If you sell it back to you personally will you be paying the full cost if it continues to appreciate at the current housing rates? Expensive!
What happens if you don't end up working from home at some point? You gonna board it up and leave it unused? Rent it to another business? Knock it down?

Daft idea.

Why didn't you ask your accountant this first? I'm assuming you won't like his answer so looking for somewhere that will give you the one you want?

[The Tall Designer]

Depends if you want to break the terms of your mortgage contract and house insurance, become liable for CT when you sell the house, be liable for business rates and can devise a mechanism to block out that part of the house outside business hours...

In other words, don't be silly. If you want an expensable business space, build it in the garden all by itself.

I love being silly - the capital gains thing only matters if and when you sell and given my mum was born here and I inherited it and would be ostracised for selling it, thats never happening. The mortgage, well I can get round that the next time I renegotiate the terms, I already had to jump through hoops to make it happen as a contractor anyway so it's an annoyingly bespoke thing.

However - I'm getting the feeling you'd say set up a commercial letting agreement between me personally and me my business right? cheers

[The Tall Designer]

What happens if you don't end up working from home at some point? You gonna board it up and leave it unused? Rent it to another business?

I mean - I'm not the first to think of it - loads of businesses already do so it's not that stupid - and let's be fair this new wave of WFH is never going to end and if it does, contractors will be the last affected

BUT if you reckon a rental agreement is the best thing to do, happy days - thats exactly what I am here to find out in a faster way than my slow as hell accountants

[eek]

Loads of businesses do it?

Really, I'm not aware of anyone who has implemented such a half brained scheme

[northernladuk]

I mean - I'm not the first to think of it - loads of businesses already do so it's not that stupid - and let's be fair this new wave of WFH is never going to end and if it does, contractors will be the last affected

You are correct, people have been trying this one on since contracting started and as there are no standard articles on it then that speaks volumes. What there is however, is a ton of articles about charging/renting office space and HMRC has considered the topic and created the use of home office simplified tax solution. Very very few people bother renting the space, just claim the allowance instead.. And no, you can't add rent for use of kitchen, toilet and no you can't buy a vacuum cleaner as a business expense to keep the office clean (actual questions we've had on here).

Businesses do it to land/buildings owned by the business. You are doing it to a residential property owned by you which is totally different.

BUT if you reckon a rental agreement is the best thing to do, happy days - thats exactly what I am here to find out in a faster way than my slow as hell accountants

You know you are asking a load of contractors here, not accountants... Faster != correct.

[WTFH]

my mum was born here and I inherited it ...
The mortgage, ...

Just wondering, if you inherited the house, why do you have a mortgage on it?

Also, if the mortgage says "no business use", then if you run your business from there, your home insurance is invalid (and probably any insurance you have on your business equipment)