Can I claim my garden office through my limited company?

This is a question I had, and I am still considering purely because I would like to get a garden office! It will be so helpful to be able to leave work at work and walk in the house and not worry about anything.

So here are my findings 😊

I can definitely pay for my garden office through my limited company but there are lots of things to consider.

A garden shed is a structure and so I can’t deduct the full amount as a tax expense at once.

I can however claim capital allowances for all the things that are not structural like furniture, shelving, electrical, wiring (despite it being part of the structure) etc. and this also applies to any repairs to the garden shed.

If I intend to use the garden shed for personal affairs (like storing the bikes in it, and having a storage area attached), I might be liable for benefit in kind tax on the bit that is not being used for business purposes. This is because it is an expense that the company paid for me, that I did not have to pay for myself/out of my money. It is extremely hard to prove to HMRC that garden sheds are only used for business purposes, so it is worth noting that I will need to be prepared to pay the benefit in kind tax.

My company is VAT registered and not under the flat rate scheme, so it can pay for everything and still claim the VAT back on everything if the supplier is VAT registered. I also need to ensure that the invoices are made out to my company and that all relevant VAT and contact details are on the invoice. If I use a portion for personal use, I will have to exclude the personal usage percentage from the VAT that I intend to claim.

Capital Gains Tax (CGT) is something I need to also consider because even though I would get a primary residence exemption, the rules say that ‘as long as there is no exclusive business use in your property, including outbuildings’.

If my garden shed is ONLY used for business purposes, the percentage that is used for business will not be exempt for CGT purposes. Because I am thinking of also using a portion of the shed for personal use and I will be paying PAYE on benefit in kind, the primary residence exemption applies, and I will get the full benefit when I sell my house.

So, if I start including figures in my example above:

The garden office costs £12 000 including VAT.

The house’s market value at the moment is £500 000 and the house costs £350 000 when we purchased it.

I am planning on buying £2000 for shelves, furniture for the garden office.

And the extra wiring, electrical and floorings costs £2000 including VAT.

The business usage is 75% and the personal usage is 25% {No electrical or wiring needed – only a shed}

I can claim the following VAT back on the above:

£2000 – {(£12 000+£2 000+£2 000) x 20/120 x 75%}

Benefit in Kind on which I will be taxed in my personal capacity - £3000, taxed depending on my tax rate.

Capital Allowances that can be claimed - £4000

Conclusion:

The above scenario sounds like a particularly good option and now I just have to convince my husband 😊