Monday, June 16, 2008

The business of shedworking - part 1

Each day this week Alan Young of 1st Addition Accountancy will be looking at the business side of shedworking in the UK. Here's his first post:
"One of the key things most homeworkers want to know is what expenses they can claim for running their business from home. And, more importantly, how will the standard answers be affected by the fact that we are working from a shed or garden office building that is separate from the house?

"Well, as with most things in life, there is some good news, and some bad news, all arising from the way the Inland Revenue view our sheds as part (or not) of our main residence. The key fact here is that the Inland Revenue do not consider our shed to be a part of the main body of our house: because our shed is going to be our main place of work, we can claim all of the costs involved with its installation and operation.

"Capital expenditure (purchase of the building structure, furniture, fittings and equipment) is 100% allowable, but will be spread over a number of years, to reflect the expected useful life of the asset. Other costs will be fully claimed in the year they are incurred, such as decorating the office, telephone installation, connection of electricity etc. Just one word of warning; if the building is used partly for personal purposes (ie, storage of garden equipment or other personal items, or as a summer house) then all costs incurred will be split on a pro rata basis, between allowable and disallowable for tax purposes."
Tomorrow: the bad news...

Alan also runs a useful blog which is well worth a browse.

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