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[30.06.2020]

Garden Office in green space

Building a Garden Office Through Your Business

As many of us have been working from home for the last few months it seems that our whole approach to work is changing.  Last month Twitter announced that staff could continue working from home “forever” if they chose to. In addition, a recent survey found that 28% of employees expected their employers to take a similar approach post Covid-19.

You may find that you are enjoying the flexibility of running your business from your home, if not all the time, at least in part.  However, any long-term plans to work from your home depend on having a suitable environment to promote good work habits.  While working from your kitchen table or spreading your documents out on your duvet might be alright occasionally or for a few months when there are no other options, it’s not a long-term solution. So perhaps it is worth considering a commute again, but this time to the end of your garden.

Garden offices can offer the best of both worlds if you are lucky enough to have the space.  Obvious benefits are ditching the soul-destroying and time-wasting commute, scheduling your day around school pickups, and concentrating more fully on your work without the distraction of office chatter and interruption.  At the same time, you can also utilise the benefits of “going to work”, for example, no distractions in the shape of laundry piles, dirty dishes, and demanding (though no doubt charming) children. Finally, you can also make the workspace dedicated, so you don’t have to worry about important documents being snapped up to draw a picture of Elsa or write a shopping list on the back of. 

However, if you want to secure an office that is well insulated and of a suitable quality to provide a long lasting, comfortable workplace you could end up paying anything up to £30,000.  So how can you make the finances work?

Buying a garden office through your company

Setting up and paying for your garden office through your limited company is the obvious solution, it is possible, and you can get some tax relief.  However, it is not straight forward and there are some issues to consider.

It’s unlikely you can claim relief on the office itself.  As a structure, even if it is a mobile one, you will probably have to take a hit on any costs related to planning, building and installation. In addition, some councils could also apply business rates to it.  Nevertheless, you should be able to claim capital allowance on items such as insulation, wiring and plumbing.  In addition, you can claim on furniture and equipment, while ongoing running costs and repairs can be claimed as expenses.

Things get a little bit complicated if your company builds a garden office for anything other than business use.  For example, using it for personal reasons qualifies as a benefit in kind and you will have to declare this on your personal tax return. This applies even if you just use it to do art with your children at the weekend, or open it up to the elements in the summer months to read a book and enjoy a relaxing drink.  If you’re not sure, you could work the cost of benefit in kind into your calculations; if you don’t have to pay for this, then consider it a bonus.

What do I have to think about in advance?

Planning Permission

Firstly, when costing your garden office, you should consider whether you need planning permission as this will affect your budget.  As you will discover at each point of consideration, not all garden offices are created equally.  Some are a little more than a souped up garden shed, while others seem like a nice option to take a two-week holiday in!  If your office falls into the former category, it’s most likely what is considered a “permitted” development, just like a shed, garage or gazebo.  Planning permission will most likely be required when your office boasts a more durable structure, such as proper build, taller than an average shed (2.5 metres) and takes up more than half of the grounds surrounding the principal residence.  Additional regulations apply to development of listed properties.

Claiming VAT

Secondly, consider VAT. We’ve covered VAT on working from home expenses in a previous blog, but there are additional things to consider with a separate garden office. 

If you are registered for VAT you can claim back the VAT on the cost of both the purchase of the actual building and its contents (furniture, shelving, equipment), similarly costs such as the wiring, plumbing and heating.  Sadly, this option does not apply to those registered for the flat rate VAT scheme.

On the flat rate, you can only claim back VAT if you have spent £2,000 or more on a single capital expenditure purchase.  You will need to keep your receipts for goods (the building for instance) and services (installations like electrics, any plumbing etc) separate.

Capital Gains

If you are planning on selling your home, you may need to pay capital gains tax on your garden office.  You do not need to pay CGT on your principal residence, so if your garden office is purely for work, then it could be liable for this tax when you sell. 

It would be worked out on size and specifically the percentage of the plot it takes up. Of course, as we have established, not all garden offices are equal, and if yours is a more temporary structure it will devalue more quickly, and this will also be considered in the final analysis. 

And a final note

In conclusion, there are other things to consider before you embark on building your garden office. Such as talking to your neighbours and keeping things civil and happy for all concerned.  As you can see from even this broad overview this can be a complicated area. So it is important to balance the pros and cons of what kind of building you choose and how you use it.  Your accountant will be able to advise you on the best way forward for your particular circumstances. 

As ever, we are always here to answer any questions you have.  Just call us on 020 8819 8762 or email us at [email protected]


Related Reading from Artisan Accounts

Recovering VAT on Working From Home Expenses

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