Garden offices (aka outbuildings) are all the rage for good reasons. They’re private, quiet, and personal. It’s all you need to be productive and enjoy working. It’s like a man cave (or woman shed) in a modern, sophisticated way.
Since you intend to use it primarily as a work environment, the following thought might have crossed your mind: Can you claim for the garden office?
Claiming for a garden office depends on each unique situation. You can claim up to 60% of the garden office costs. Meanwhile, sometimes, you can’t go past the 10% mark. Again, it all depends on your particular circumstances.
In this article, we will decipher the complex laws and regulations around claiming for your garden office. So, why don’t you cut out a few minutes of your valuable time to take a look?
Is the Garden Office Tax Deductible?
Without a doubt, building a garden office from scratch is a huge investment. As someone who works from home, you might not have the capital to invest in such a space, but you can still file it under “company assets” if you’re an employee. When you’re self-employed, you can claim it as a business expense in your tax reports.
But don’t give up on your garden office. The idea of working outside the house while living in the house is too big to give up on so early! When you have the space to build it, it can be a great boon to your professional life. Finally, you will be able to separate your work and family lives. So, don’t let the tax aspect deter you.
Indeed, you can get a few reliefs thanks to your garden office. If your business is VAT registered, you can deduct the VAT from the total cost of your new garden office. Simply put, you won’t pay for the tax on the materials you purchase to build the garden office. Since the costs of the building add up rather quickly, you can save a lot of money this way.
The same goes if you are self-employed. But there’s a catch: your VAT claim will deprecate every time you use the garden office for other things than working. For example, if you use it as a workplace in the morning and as a guest room in the evening, your VAT will drop. If you use your garden office for other purposes than work, you’ll have to pay the taxes on that. Does that make sense to you?
For employees, the company they work for is responsible for the garden office. They can do whatever they please with it. But whether you were an employee or self-employed, you must show evidence that you use it primarily for work.
When buying goods and services to build and furnish your garden office, you must contract under your company’s name. Otherwise, you’ll spend a lot of time proving that you have it solely for work.
Therefore, even if you’re buying something as simple as the desk, buy it under your company’s name and have receipts to prove your purchase. You can also claim other things, like plumbing, electrical work, and carpeting. As a rule, remember to have the bills and receipts under your company’s name, especially if you’re self-employed.
Nowadays, working from home has become a trend in several industries, not only for business purposes but also to ensure employees’ safety during the pandemic. If you do not have enough space for an office in your house, why not build one in your yard instead? Read our article to know how much it costs to build an office shed.
Can You Claim Capital Allowances on a Garden Office?
There’s a large grey area when it comes to garden offices and capital allowances. The laws and regulations will vary greatly depending on which state you live in, your business type, and personal circumstances.
That said, some general rules apply to claiming capital allowances on a garden office. You’ll most likely need to consult a local consultant, lawyer, or tax expert to stay out of trouble.
You can claim capital allowance deduction on curtains, chairs, cookers, refrigerators, showers, fixtures, carpets, and other decorations. Also, capital allowances apply to thermal and sound insulation fittings, even as part of the building.
However, you can’t claim capital allowances for individual items. Thus, the tax deduction will be on the total costs of these furnishings the year you installed them. It’s vital to keep those bills and receipts under your company’s name to file for tax relief.
Electricity, plumbing, water, gas, and sewage are tax-deductible when you have a separate meter from the house. Maintenance work is tax-deductible as well.
How Much Can You Claim for Your Garden Office?
Let’s look at the cost of building a garden office. The area, style, and finish determine the highest expenses. Equally important is whether you’ll DIY, hire a construction company, or buy a pre-made office from a tiny house company.
The building’s materials will cost up to $2,000. When somebody builds it for you, expect to pay an additional $2,000 for the labor. And that’s for a wood garden office. When you buy the material for $3,000, you’ll hire contractors to put the pieces together. So, the total cost can add up to $7,000.
The average cost of a ready-made outdoor office starts at $1,000 to $10,000. The style, decorations, finishes will determine the price range. For example, a 6.5×6.5ft quality office house can cost somewhere between $15,000 and $25,000.
You’re also looking at delivery and installation prices on top of that.
Then, you’ll be saving some lifestyle costs. For example, you don’t need to pay for car gas for transportation. So, you’ll be cutting expenses on car maintenance as well. Also, with a garden office, you can avoid the tormenting commute every day.
Now, you have a reasonable estimate of the cost of a garden office. Based on the general rules and laws, you’re looking at 40-60% in tax relief. When a garden office costs $25,000, the most optimistic amount you can claim is between $10,000 and $15,000.
In the worst-case scenario, when you don’t qualify for VAT, capital allowances, and other tax reliefs, you can’t claim more than 10%. In such cases, the most you can claim on a $25,000 garden office is $2,500.
How to Claim for a Garden Office?
When you’re happy with the idea of having a garden office, it’s time to submit your application through the Planning Portal.
Claiming for your garden office must be done as early as possible, most specifically during the planning phase.
The most crucial part of the planning part is to determine how you’ll finance your outbuilding. For that, start with a budget planner to get an educated estimation of the whole project. Try to compare the value of your property. You may either ask your neighbors who sold recently sold their houses or enlist the help of a local estate agent.
You may also want to estimate any foundations you’ll build, such as the installations, plumbing, internet, phone, electricity, and delivery.
Next, determine how you’ll fund your outdoor building. Will you DIY and pay for it through your company? Will you buy a prefab and pay for its installation? Or will you hire other people to build and install it?
Also, will you pay cash, credit, or mortgage your house?
Having covered the basics, you should check with your local planning authority to ask whether you’ll need planning permission. When your outbuilding is smaller than 15 square meters with no bed, you probably won’t need to apply for approval.
Now that you’re sure you’re following the building regulations, you can claim planning appeal costs.
The Basics of Building a Tax-Friendly Garden Office
The first rule of building a garden office is that it better look like it is part of your house. If it stands out, it’ll seem out of place and unnatural.
Choose Its Place Carefully
You can put your garden office anywhere there’s enough space for the foundation. Remember, your garden office should be visible if you’re looking at it from the house.
Next, it shouldn’t block the sun from your garden nor be located directly under the sun. The middle ground is a shady corner that blocks the view of your garden from the outside. Also, it shouldn’t block access to vital parts of the house for maintenance and repairs purposes.
Get the Right Size
The size will play a vital role in claiming for your garden office. It’ll determine whether you’ll need planning permission. Most likely, you will be limited on the size. So, before you put the first brick, measure your space to determine the right fit. You don’t want an oversized office harming your garden nor one that is so small you can barely use it comfortably.
Choose the Best Materials
Most garden office owners forget that it’s an outdoor building subject to all seasons’ inconveniences around the year. Thus, choose strong materials to build your garden office. Also, make sure to include your insulation plans because they’ll affect the tax discounts you can receive.
The materials are also a significant part of the garden office costs. However, it’s best to have durable materials rather than affordable ones.
The Essential Comforts
To get your garden office up and running, you’ll need to cover the basics, including necessities like electricity, plumbing, and water.
For electricity and plumbing, you want to set up a separate meter to get the tax discount. It’s recommended to hire an expert electrician for the installation to avoid complicated problems.
Next, you might want to set up a separate internet connection for your garden office. Alternatively, you can use an extender to get the internet from the house.
Also, consider a heating system for the winter. It’s another opportunity to get a tax discount.
Finally, consider using eco-friendly lighting fixtures to keep your electricity bills under control. As always, buy the lightning under your company’s name.
Building a brand new home office is costly, especially when you’ve just moved to a new house. So, it makes a lot of sense to turn your yard shed into an office instead. If you have decided to do this project, read our article to learn how to turn your yard shed into an office.
Furnishing Your Garden Office
You can either follow the style of your house or create a different one for your garden office. It’s up to your personal taste. At the same time, furniture is tax-deductible. So, make sure you keep that in mind while shopping for furniture by making the purchases under your company’s name.
Start with the flooring. It should be made from durable material to handle the heavy foot traffic from the outside garden. Besides, curtains should be thick to keep sunlight out and glass windows should be easy to open and close to allow sunlight in.
If children are allowed inside, make sure to cover the furniture to protect it from dirty play.
Garden Office FAQ
Having covered the basics, let’s look at some of the most frequently asked questions.
Can I install a shower in my garden office?
Yes, you can install anything that’ll help you do your best work, including a shower. You’ll need to discuss it with your plumber and include it in the original plan.
Can I have several rooms in my garden office?
Sure, but keep in mind that the primary use of your garden office is for work. Also, you will be limited in size to qualify for planning permission. Therefore, having multiple rooms may affect your qualification for available tax discounts.
Is it possible to live in my garden office?
If you do, then it’s not really a garden office. It’s a man cave or an outdoor area. Tax deductions only apply when your garden office is strictly for work. Otherwise, you’ll violate building regulations and lose your qualification for tax qualification.
What if I sell my house?
Unless you can transport your garden office, you’ll sell it with your house. If you can’t transport it, however, the new owner will have to demolish it. The tax deductions were made for your company, and you should contact the local authority to let them know of the new situation.
When do I need planning permission?
When your garden office is higher than 2.5 meters, you’ll need planning permission. You’ll also need planning permission if you’re building in Areas of Outstanding Natural Beauty (AONB). Ask your landlord for their planning permission. If you’re building on land that’s not pre-approved, you’ll need to get it.
Having a dedicated space that you can use for work is very important, especially for those who are working at home. By having an office, you will be able to easily separate your home life from your work life. If you don’t have enough space in your house for an office, why not build one in your garden?
Building a garden office will definitely cost you money. Aside from the building itself, you will also need to pay for the furniture that you will place in it along with the labor cost of the services that you might need to finish this project. The good thing is, you can claim for your garden office and get tax deductions. Just make sure that you will only use this structure for work so that you won’t get in trouble with the law.