Are Garden Offices Tax Deductible in the UK?
Garden offices are incredibly popular as they give you a dedicated home working environment that stands alone from your house. You get the feeling of “going to work”, without actually travelling to work!
Those considering investing in outdoor offices for their work have many considerations and one of the main ones is, are garden offices tax deductible. This is what I explain below so you can fully understand the potential financial implications of owning a garden office.
What is a Garden Office?
A garden office is essentially a garden room that has been kitted out to be used as a full-time place of work. Particulars include:
- Standalone structure situated in your garden.
- Kitted out with insulation and proper ventilation to use all year round.
- Furnished to be used as an office.
Don’t think of a garden room as a glorified shed – they are so much more than that. Garden offices are fully insulated and ventilated so you can use them all year round, and they can be incredibly comfortable.
You might put a desk and office chair in your garden room, give it WiFi connectivity, and even have filing cabinets, shelves, and some furniture like a sofa or a comfy chair. It’s the place you will work from if you work from home – instead of using a spare room or your dining table!
Understanding Garden Offices and Tax
When answering the question, are garden offices tax deductible, it’s not a simple yes or no answer. Instead, you have to look at the individual components of a garden office as they have varying tax statuses.
Initial installation cost
Are garden offices tax deductible? No. The initial construction, material, installation, and delivery costs are NOT tax deductible. The HMRC counts a garden office as a structure and therefore can’t be claimed.
Basically, anything you pay towards buying and getting your garden office installed is not tax deductible. This also includes the initial decoration costs (plastering and painting for example).
Furniture, fixtures, equipment, etc.
While the cost of the structure, installation, and delivery are not tax deductible (usually classed as capital items), what you put inside your garden office is! This includes, but is not limited to:
- Office furniture
- Electronics such as a computer and telephone.
- Office stationery.
- Interior features like curtains and blinds.
- Shelves and storage.
- Lighting.
Essentially, anything you put inside your garden office that is directly related to your work can be dedicated as part of your Capital Allowance. If you ever need any repairs for your garden office this can also be claimed.
The main point is that the claimable items should be related to your work and not just your quality of life so something like a sofa that you use to relax on during the summer may not be claimable.
Insulation
If you have thermal insulation fitted into your garden office this can be tax deductible as part of your Capital Allowances even though it may have been fitted during the initial installation.
Running cost
If you work from home you are obviously using electricity and utilities and these can actually be claimed as deductible expenses if you’re self-employed. The list includes:
- Business and water rates
- Property insurance
- Security
- Utility bills
- Using your home as an office
This generally doesn’t apply if you are employed however and simply don’t want to work at your company’s office. Tax relief can only be claimed if you are employed and your business has no office, or your job needs you to live away from your home which isn’t applicable with a garden office.
Selling your property
Years down the line if you want to sell your property there is obviously a concern that your garden office is subject to capital gains tax.
The GOV UK website states that when selling a home, you may have to pay capital gains tax if you have used part of your property exclusively for business purposes.
Therefore, if you have a garden office and use it all the time, you will have to pay capital gains tax. Alternatively, if you only use it occasionally, or it’s a temporary office, you are exempt from capital gains tax.
Garden Offices are Not Usually Tax Deductible Except for the Interior Elements
Sadly, the initial cost of your garden office including delivery, installation, and the structure itself is NOT tax-deductible despite being a movable structure. This is just how the UK tax system works and HMRC defines garden offices as a structure that your business operates from.
The good news is that anything you put inside your garden office such as furniture, electronics, and office equipment is tax deductible. Just remember though, that the main purpose of your garden office is to improve your quality of life, give yourself a dedicated working area, and make more space in your house!
Frequently Asked Questions (FAQ) Are Garden Offices Tax Deductible in the UK?
- Can Building A Home Office Be Offset Against Tax?
Building a home office in the UK can be offset against tax if it is used solely for business purposes. The costs incurred for constructing or renovating a home office may be eligible for tax relief. Ensuring that the space is used exclusively for work-related activities is essential. Individuals should maintain detailed records and seek guidance from a tax professional to accurately claim expenses related to their home office against tax liabilities.
- Can I Claim Vat Back On A Garden Office?When considering claiming VAT back on a garden office in the UK, it is essential to note that VAT can typically be reclaimed on goods and services used for business purposes. However, for a garden office to be eligible for VAT reclaim, it must be used solely for business activities and not for personal use. If the garden office is used for business and personal purposes, only the portion used for business may be eligible for VAT reclamation. It is advisable to keep detailed records of the business use of the garden office to support any VAT reclamation claims.
- Is A Garden Office Tax Deductible HMRC In The UK?A garden office may be tax deductible according to UK HMRC rules if used exclusively for business purposes. To qualify for tax relief, the garden office must be essential for the operation of the business and not have any personal use. It is crucial to keep detailed records and receipts to support the claim for tax deduction. The HMRC guidelines state that costs related to the garden office's construction, maintenance, and utilities may be considered allowable expenses for tax purposes. It is advisable to seek professional advice to ensure compliance with HMRC regulations when claiming tax relief for a garden office in the UK.
- What Is The Depreciation Rate For A Garden Office?
The depreciation rate for a garden office in the UK is typically around 2% to 3% per year. Factors such as the quality of materials, construction method, location, and maintenance can impact this rate. It is essential to keep detailed records of any improvements or upgrades to the garden office, as this can affect its depreciation rate. Consulting with a professional appraiser or tax advisor can provide more specific guidance based on individual circumstances.
