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Can my limited company pay for my garden office?

Covid-19 saw a huge increase in the number of people choosing to, and being able to, work from home. Now, having seen huge savings in travel time and cost, many are understandably keen for this to continue.

To facilitate this, being able to create the right work environment is key. For some this is easy, and they are happy working from the kitchen table or the spare bedroom.

For others there needs to be a clear divide for themselves and their family, a clear distinction between work time and family time. This is where having a separate workspace away from your home can be a massive benefit for your productivity and well-being.

A garden office is a great option if you have an outside space. A garden office could be as simple as an ordinary shed costing a few hundred pounds fitted out with a few extra comforts – lighting, heating and insulation…

To a purpose-built garden office costing more than £20,000.


Can I put the cost of a garden office through my limited company?

The good news is that yes you can get your limited company to pay for the cost of your garden office, but you need to be fully aware of the tax consequences of doing this.


Can I claim tax relief on the cost of a garden office?

The office is considered a structure for tax purposes, so while the cost of the building and installation is not tax deductible the company can still pay for it.

This is still tax efficient for you and your business as the alternative is for you to pay for it out of your personal after-tax income.


Are there tax benefits to getting my limited company to pay for my garden office?

Yes, while you don’t get tax relief on the cost of the office build and installation you can get tax relief on the cost of fixtures and fittings – electrics, plumbing, insulation, furniture, carpets, lights, blinds.

You can also claim for ongoing costs such as electric, water, repairs and maintenance.


Can I claim back the VAT on the cost of a garden office?

If your limited company is vat registered, then yes you can claim back the vat on the cost of the building and installation of the garden office and on the fixtures and fittings.

However, there may be restrictions to what you can claim if your company is either on the flat rate VAT scheme or on a partial exemption scheme. Speak to your accountant if this applies to your limited company.


Can I use the garden office for non-business purposes?

Yes, you can use the garden office as a space for children to play in, to watch films, read books etc; but there may be a tax charge that needs to be reported to HMRC for this personal use.


Do I need planning permission for a garden office?

This depends on the size and location of your garden office. Most residential properties have what is called ‘permitted development rights’ which usually means garden offices, conservatories, garages can be build without needing planning permission.

However, it is recommended that you discuss this with a qualified professional or your local council planning office just to confirm that you don’t need planning permission.

If you do construct a garden office and find out afterwards that you did need planning permission, you can still apply for it retrospectively.


Will I have to pay Capital Gains Tax when I sell my house?

If you use your home or part of your home, and that includes a garden office for partial business use (i.e. not 100% exclusive business use) then you will not have to pay Capital Gains Tax (CGT).

If you use your garden office for 100% business purposes, then yes you may have to pay capital gains tax on part of the profit made on selling your house.

However, DON’T let this put you off getting a garden office, especially if you aren’t planning on selling your home any time soon.

The CGT charge would usually be limited to a percentage of the overall profit on the sale of your home based on the amount of your property the office occupies. So, 5% space means 5% of the gain. And its likely that the profit will be covered by your annual capital gains tax allowance.


Next steps?

If you’re interested in finding out more about how you can get your limited company to pay for your garden office, please get in touch.