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Garden Office & Tax Relief

Garden Office – Tax Relief and other implications

The last 18 months has seen a big rise in the number of people now working from home. Understandably people want to feel comfortable working from home and have the correct environment to remain productive (or even increase productivity). 

We have seen a lot more queries around the tax implications of building or installing a home office in the garden. Given it’s increase in popularity we thought it might be an idea to send something out with some useful guidance on the pros and cons. Trying to keep things simple here are the main points to consider:

General tax relief

There is nothing stopping a company paying for the cost of the installation or building of a garden office as long as it is used for business.

However this does not mean tax relief is available on this. Under HMRC rules this will count as a structure (even if it is moveable) and will fall under the tax rules for Structures and Buildings. These rules specifically exclude tax relief on expenditure on structures contained within a residential property. Your garden being part of your residential property means that a garden office will be excluded for tax relief.

All is not lost however !

Although tax relief is not available on the structure itself (including planning and design and initial decoration costs), it is available on some other costs. 

  • Fixtures and fitting of the office (such as shelving, desks, etc)
  • Equipment for the office (computers, printers etc)
  • Future redecoration costs and day to day running costs will all attract tax relief.
  • The costs of installing power to the office, eg wiring, plumbing and heating etc).

Note

If the office is used for personal reasons as well as business use the tax relief above may need to be restricted to only claim business use elements of the cost, and/or benefit in kind charges may apply, see below.

VAT

If your business is VAT registered you are able to reclaim all of the VAT charged on the installation and all other aspects of the garden office as long as the office is solely used for business purposes.

If your garden office is used for both business and personal reasons then you must only claim the element of the VAT that is for business use. 

Note

That if the office is used for personal reasons as well as business use this may give rise to a benefit in kind charge and further tax charges, see next item:

Benefit in Kind 

BIK tax is payable when a company/employer pays for the director’s or employee’s personal expenses. For example – eg, The company paying for cost of the garden office that is also used as a family room.

If a company pays for the garden office and it was also used privately for other means or by other family members, this will attract a benefit in kind charge and could also result in restriction of other allowances for the business as the property needs to be used exclusively for business purposes.

Business rates

You may be liable to pay business rates, you would need to check with the valuation office to see if you would.

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