Can I reclaim the VAT on the cost of my garden office?

If you are VAT registered and build it through your business then absolutely YES. Some key pointers below:

▪ Ensure the business pays for all costs, you cannot claim the vat back if you pay personally

▪ If you are planning to use the garden office for personal use as well you are only able to claim back a portion of the VAT

▪ Clients under the flat rate VAT scheme can only reclaim capital purchases no less than £2,000. VAT cannot be reclaimed for services. Ensure materials are bought separately to any installation costs

What Capital Allowances Can I Claim?

There is no tax relief on the initial costs of materials nor planning/ legal/ architecture/ design fees.

The good news is that anything you put inside the garden office ie; computers, desks, printers, chairs, office furniture etc You are able to claim 100% Annual investment allowance on.

Does my Garden Office Depreciate?

Generally, we do not depreciate buildings, if you were to depreciate your garden office a small percentage of 2% would be acceptable.

If I sell my home do I have to pay Capital Gains Tax because of the Garden office?

Yes.

When you sell your personal home you aren’t required to pay capital gains tax as its your principal private residence. However, if part of your garden is used solely for business use you will have to pay CGT on the percentage of total floor area, see below for an example

Garden office £10,000 5% of floor area. Private home is sold for £250,000

The amount liable to CGT would be £12,500, we would then take off the Garden Office costs of £10,000.  The gain would be £2500. This would be covered by the capital gains tax exemption of £6,000 in 23/24 (falling to £3,000 in 2024/2025)

Pro’s

▪ Claim Business Running Costs

▪ Claim Capital Allowances on contents

▪ Reclaim VAT

Con’s

▪ Director may be liable to personal tax liability (P11D)

▪ If you sell your home, you may be liable to Capital Gains Tax

If you have any questions regarding the above or would like to discuss any tax problems or queries with us, please contact us.

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