If you are considering working from home then it may be necessary to modify part of your home, or convert an existing outbuilding or build a suitable “garden” office or workshop.
Home office/workshops come in different shapes and sizes. Similar tax issues arise whether you are converting your home to run a business such as a B & B or are running an office from inside it, using one or two rooms as a surgery or have constructed a purpose-built building in the grounds.
Self-employed: converting part of a home into an office
The main concerns for tax purposes are:
- Capital Gains Tax (CGT) treatment of capital costs
- VAT treatment of capital costs
- Stamp Duty Land Tax (SDLT)
- Capital allowances on fixtures and plant and machinery
- Treatment of repairs and renewals
- Click here to access the guide for the self-employed
Directors and companies: converting part of a home into an office
Tax becomes complicated when a director's home is being converted, as there are different implications depending on whether it is the director or the company intending to pay the conversion costs.
If a director incurs the cost himself he needs to consider:
- Capital Gains Tax (CGT) treatment of capital costs
- VAT
- Stamp Duty Land Tax (SDLT)
- Capital allowances on fixtures and plant and machinery
- Treatment of repairs and renewals
If his company incurs the cost (or reimburses his costs) it needs to consider:
- PAYE and NICs
- VAT
- Capital allowances
- Treatment of repairs and renewals
- Click here for the guide for directors and companies.
