Clear House Accountants Clear House Accountants
Contact SWITCH ACCOUNTANTS
  • About Us
  • Services
    • Accounting Services
    • Business Advisory
    • Business Support
    • Payroll
    • Service Charge
    • Tax Services
    • VAT Services
  • Expertise
    • Personal Tax Accountants
    • Xero Accountants
    • Technology Accountants
    • Startup Accountants
    • SaaS Accountants
    • Limited Company Accountants
    • Contractor Accountants
    • Business Accountants
    • Accountants For Self-Employed
    • QuickBooks Accountants
    • Accountants For Freelancers
    • Accountants for E-Commerce
  • Locations
    • Accountants Near Me
    • Accountants in London
    • Accountants in Stanmore
    • Accountants in Harrow
    • Accountants in Wembley
    • Accountants In Aldgate
    • Accountants in Surrey
    • Accountants in Walthamstow
    • Accountants In Bermondsey
    • Accountants In White City
    • Accountants In Camden
    • Accountants In Shoreditch
    • Accountants In Mayfair
    • Accountants In Vauxhall
    • Accountants In Northfield
    • Accountants In Romford
    • Accountants in Leytonstone
    • Accountants In Luton
    • Accountants In Ilford
    • Accountants In Barking
    • Accountants in Elephant and Castle
    • Accountants in Canary Wharf
    • Accountants in Highgate
    • Accountants in Tower Hill
    • Accountants in Ruislip
    • Accountants In Croydon
    • Accountants in Holborn
    • Accountants in Wood Green
    • Accountants in Uxbridge
  • Resources
    • Calculators
      • Business Startup Calculator
      • Return on Investment (ROI) Calculator
      • R&D Tax Claim Calculator
      • Business Profit Calculator
      • Self-Employed Income Tax Calculator
      • PAYE Tax Calculator (Tax Year 20/21)
      • Instant Quote
    • Growth Portal
  • Partners
  • Blog
    • Small Business Advice
    • Tax Blog
    • General Blog
    • Updates
    • Compliance Blog
    • Startup Blog
    • Growth Blog
    • Accounting Software
  • Contact
Is It Possible To Use My Limited Company To Remodel My Home Office
07 Jul

Claimable Home Office Expenses from Limited Companies


By:   Jibran Qureshi Small Business Advice Comments:   No Comments

Since the passage of Covid-19, working from home has become a standard practice in the United Kingdom, with millions of people employed as directors of personal service businesses either inside their house or in a separate yard/shed space. Here, we will exclusively explore claimable home office expenses from limited companies, and which expenses benefit from tax relief via your limited company.

Conversion Costs Of Your Home’s Office

If you’re kitting out your home office with work furniture, shelves, and storage, for example, these costs would be eligible for capital allowances.

You can also claim capital allowances on products like insulation, electrical wiring, and plumbing if you’re converting an empty room such as an extension or loft conversion.

If you want to expand your home or create a loft conversion, keep in mind that these construction expenditures are considered an improvement to your property. Although it may be paid for through your limited company, it cannot be subtracted from profits for tax reasons – HMRC would see these expenditures as a “setting” rather than a “function” of your firm.

Existing ‘decorative peripherals’ (such as blinds and curtains) are an important element of your home. However, if the items are for a new room (e.g., extension or loft conversion), the company can cover the expenses of the blind or installation as long as the space is used solely for business purposes.

Ultimate Guide Bundle to Start and Grow your Business

Building A Garden Office Or Shed

 A garden office is usually regarded as a structure, which means it isn’t eligible for tax relief against your business earnings. Even if it’s mobile, you’ll have to budget, construct, and install it. It doesn’t imply that your small firm can’t pay for it; it just means that the expenses aren’t deductible. However, as previously stated:

  • Capital allowances are available for office furniture shelves, storage, insulation, electrical wiring, and plumbing. Repairs, curtains, and decoration expenditures can all be deducted from taxable income.

What Are The Expenses Of Running A Home Office?

The following are some of the extra costs that you may claim:

  • Costs for heating, lighting, and utilities are set according to the size of your workspace.
  • Metered water costs vary by workspace.

If you have dedicated services (such as broadband, gas, or electric) provided to your work office through a separate meter, you can claim the expenditures in full.

VAT Implications

If the firm is VAT registered, you can deduct the business’s VAT-able expenditures such as shelving, equipment, plumbing, and wiring from your taxable profits. You may also claim any operational expenses associated with the workplace.

If you are using the Flat Rate VAT Scheme, you can only claim VAT on capital items costing more than £2,000 during a single tax year. Any VAT charged, however, must be backed by a VAT invoice in the company name and the expenditure must be for purely business reasons.

Other House Office Problems (Including The Sale Of Your Home)

If you use part of your home as a business workspace, garden office, or shed, there may be capital gains implications if you sell your property while the places utilized just for business purposes will not qualify for primary residency relief.

There are also other factors to consider, such as business insurance and business rates, which may be due if you operate a company from home.

If you shut down your firm, the extension or garden shed will be taken away from you and sold back to you before closure.

In case, you’re working through a limited company and are inside IR35, these expenses will be paid from the existing business or taxed funds, which will be sent to the firm. If you think that you will be IR35 caught in the future and intend to work via an umbrella firm for the long haul, any extension expenses, office or garden shed expenditures should not be expensed through your current dormant business. Because you would not satisfy the completely business-related requirement for expenses purposes (in other words, because you are not trading through your existing PSC), there would be an advantage in kind.

In Conclusion…

If you are working through your PSC in the long term and must work from home on a regular basis, setting up a distinct area is an excellent choice. However, keep in mind that if you spend the bulk of your time working onsite somewhere else, HMRC may question the profitability of a significant expenditure on your workspace. Given the complexity of this problem, we suggest contractors obtain advice tailored to their circumstances before making any significant expenditures.

If you use part of your home as a business workspace, garden office, or shed, there may be capital gains implications if you sell your property while the places utilized just for business purposes will not qualify for primary residency relief.

There are also other factors to consider, such as business insurance and business rates, which may be due if you operate a company from home.


Jibran Qureshi

Jibran Qureshi

Managing Director

+44 (0)207 117 2639

info@chacc.co.uk

chacc.co.uk

Author Bio


Jibran Qureshi FCCA  is the Managing Director of Clear House Accountants and has over 13 years of experience in practice across multiple industries. Jibran’s educational background includes a Master’s in Financial Strategy from Oxford University and an Executive MBA from Hult International Business School. His experience in Financial Strategy, Tax Planning, Operational Consultancy and Performance Reporting guide his cognizant approach to leading Clear House and its clients to the future. This dexterity led him to be Enterprise Nation’s Top 50 Advisors. Jibran recognised the need to manage the innovative disruptions sustainably early on and shaped Clear House Accountants not just to be compliance specialists but advisors who help build complex ecosystems around cloud accounting software, provide advice on funding support, help manage innovative tax schemes, set up and implement complex strategic plans, and much more.  So, his clients can thrive, not just survive.


You Might Also Want To Read

A Complete List Of Director’s Responsibilities In A Limited Company
What Is A Companies House Confirmation Statement?
Director’s Salary: Can A Company Pay Its Director With A Gross Salary?

Leave a Comment Cancel reply

Categories

  • Accounting Software
  • Blog
  • Compliance Blog
  • General Blog
  • Growth Blog
  • Must Read
  • Small Business Advice
  • Startup Blog
  • Tax Blog
  • Updates

Recent Tweets

Tweets by CHAccountants

Disclaimer

The information provided was correct at the time of writing. Although every effort has been made to provide complete and accurate information, Clear House Accountants assumes no responsibility or liability for any errors or omissions in the content of this site. All information on this site is intended for informational purposes and is provided "as is" with no guarantee of completeness, accuracy, or timeliness.
Accountants in London

Clear House Accountants provide services to startups, sole traders and SMEs

Find More Information

About Us

  • About Us
  • Sitemap
  • Blog
  • Contact
  • Referral Program
  • Privacy Policy

+44 (0)207 117 2639

info@chacc.co.uk

Our Offices

  • London Office
  • Harrow Office
  • Stanmore Office
  • Wembley Office
  • Aldgate Office
  • Surrey Office
  • Walthamstow Office
  • Bermondsey Office
  • White City Office
  • Camden Office
  • Shoreditch Office
  • Mayfair Office
  • Vauxhall Office
  • Northfield Office
  • Romford Office
  • Leytonstone Office
  • Luton Office
  • Barking Office
  • More Locations

Copyright 2010-2022 © A Firm Registered in England. Clear House Accountants. All rights reserved.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie settings
AcceptReject
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are as essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.

Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
SAVE & ACCEPT

Insert/edit link

Enter the destination URL

Or link to existing content

    No search term specified. Showing recent items. Search or use up and down arrow keys to select an item.