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There are CGT implications if you use part of your private property as business. Any gain realised from sale of property pertaining to that element used solely as business would be subject to CGT.
More information on this can be found here
If you cease to trade and start using the studio as an integral part of the main property the it would be regarded as private residence and you would be able to claim private residence relief against the gain.
You will find this articles "What expenditure qualifies for plant & machinery allowance" and Capital allowances relating to buildings and renovation” helpful .. look here
Your accounting entries for the cost of studio should be
DR. Tangible assets (with the cost of studio broken down into)
- Fixtures and fittings
- Land and buildings
- Capital introduced (if sole trader)
- Director's loan account (if trading as LTD company)
I hope this is helpful and answers your question.
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