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Question regarding expensing works to create a home office

Customer Question

Question regarding expensing works to create a home office for limited business: I have a garage in my garden that was built around a year ago. It has planning to be converted to a dependant annex. I have been advised that I can convert the garage for use as an office (add a mezzanine floor, roof windows, sliding doors, flooring, drainage and a kitchen) and put all of these expenses down against the revenue of my business.
My question is two-fold - Can I expense EVERYTHING or are there certain things I will need to pay for myself. And when the garage is complete, can I charge my business rent to occupy it.
My business is limited, I currently working from a rented office and the business type is marketing/advertising.
Thanks in advance!
Submitted: 10 months ago.
Category: Tax
Expert:  bigduckontax replied 10 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

Well, yes you can, but you will be liable for Income Tax (IT) on the rent received. The whole proposal seems over complex. Just use the Annex for business and charge all expenses thereof to the same leaving a surplus which will be liable to IT.

That is the rough and ready twist of the spoon to stop the treacle running off so to speak and by far the easiest way to manage the matter. If HMRC insist on the conversion costs being a capital allowance matter it will not make the slightest difference as the Annual Investment Allowance (AIA) under that regime is at 100% anyway.

I do hope that you have found my reply of assistance.

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