Dedicated workspaces at home could become the new norm for Directors of your business. Folkes Worton can help you by identifying what can and can’t be claimed for.
- If you put an office in at home or an extension on the property which Is being used as an office then this should be reflected in the balance sheet. If the company then has exclusive use to this there should be no benefit in kind charge as long as any private use is incidental.
- The part of the building used (the extension) has not private residence relief and therefore when the building is sold the part which Is the office will be subject to CGT. To get around this you could say it is used as a private property at weekends but then you fall in the benefit in kind charge area.
- A company will not be able to claim for tax on the actual build but may be able to claim tax back on the furniture and the equipment in the room. VAT should be able to be reclaimed on the building but you will need specific advice on this.
- You could build the property yourself and then charge the company rent for the use of the part of the building which Is the office but you will need a proper rental agreement.
- The rent a room relief would mean the tax charge would be none.
- You must ensure the rent is the right amount by calculating size and no use at weekend or you will be income tax charged. You may be able to mitigate this with corporation tax relief that the company gets but this will be client specific and you must speak to the partner you deal with here at Folkes Worton.
- Finally ensure with your council that there is no business rates to be payed on the home office area.
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Accounting for the Future with Folkes Worton