Tax and your garden office

One of the most common questions we're asked is whether shedworkers can set the cost of their garden office build against tax. We've covered it before here and in the Shedworking book where we suggest that, basically, yes, you can, but our general advice is always to talk to your accountant/tax adviser first or even to ring the tax folk up themselves and ask their opinion. However it's always good to get more opinions on the subject and there's an interesting write-up at the Society of Virtual Assistants' site. Here's a snippet but please do read the whole thing:

The Taxman will treat the cost of the garden building as capital expenditure, as the item is expected to last for some years. You are only allowed to deduct the cost of capital expenditure from your profits for tax purposes when the item purchased qualifies for a so-called capital allowance.

All equipment that is used within the business qualifies for a capital allowance. But your garden office is not a piece of equipment, it is a structure in which the business operates, – at least for part of the time. So on the face of it you cannot deduct the cost of the garden building from your profits. This applies even if the building is theoretically moveable, such that it can be dismantled and reconstructed elsewhere if required.

If your business is VAT registered you can reclaim the VAT charged on the cost of acquiring and installing your garden building, on your quarterly VAT return.

------------------------------------------------------------------------

Tuesday posts are sponsored by The Home Office Company, manufacturers of unique garden rooms since 1998. Now in 10 exciting new colours. Click here for more details.

The business of shedworking - part 5

Alan Young of 1st Addition Accountancy ends his week-long series of postings with a look at Other Things To Consider:

"So, if we are running our business from a garden office or home, what else do we need to consider? For a start, most mortgage companies ask us to stipulate whether or not there is a business element to our occupation. We may need to be able to prove to them that we have separate business insurance to cover us for this.

Also, running a business from home may attract the attention of the Valuation Office Agency who will determine whether or not a property will attract business rates. Guidelines for this can be found at www.voa.gov.uk/council_tax/working_from_home.htm, however, as our house remains, substantially, a domestic residence, this is unlikely to be a major issue for us.

When running any business from home, it is important to ensure that we have adequate insurance, to cover us for all eventualities. If we use our garden office or shed simply as a base to perform our administration, then it is likely we can extend our household insurance policy to cover the additional value of equipment kept there. If, on the other hand, we meet clients there, or are considering taking on employees, then we will need to look at taking out a specific, separate business insurance. Small business ‘packages’ are currently available, which cover us for all aspects of business insurance, including public liability, employee liability, business interruption insurance etc. These packages are available from around £250 a year.

"Legislation is constantly being updated, and the only piece of advice that never changes is; always check with your accountant, when looking to claim or calculate these expenses."

Alan also runs a useful blog which is well worth a browse. Many thanks to Alan for putting these posts together - if you are in need of his expertise, you can contact him via his site and blog.

The business of shedworking - part 4

In his penultimate look at the business side of shedworking this week, Alan Young of 1st Addition Accountancy looks at Moving On:

"This is where shedworkers can afford a little smile. If we treat a room in our house as 100% business, and claim all of the costs involved with that room, then, when we sell our house, the profit attributable to that part of the home will not be eligible for Private Residence Relief, and may be subject to Capital Gains Tax, if it exceeds our annual exemption.

If, on the other hand, we claim 100% of the costs of our garden building, because it is not classified as part of the house, there is no liability to Capital Gains Tax. Another word of warning; a shed or other garden building will not be classified as a separate building for tax purposes, as long as it is within the ‘specified area’ of the garden (currently half a hectare, or a little over an acre). If your garden is larger than this, then you will need to be wary of the potential tax implications."

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

The business of shedworking - part 3

Alan Young of 1st Addition Accountancy is now halfway through his daily look at the business side of shedworking in the UK. Here's his post So What Can We Claim?:

"Hopefully, the amount we claim for the cost and installation of our garden office will more than offset the fact that we are unable to claim an element of the household running costs. Other allowable costs include:

• Telephone (including line rental) apportioned by call time (incoming and outgoing). A dedicated business line can be claimed in full.
• Broadband (as telephone costs)
• Electricity / gas / water. Ideally, these should be separately metered, but if not, we should calculate the extra usage involved on our domestic supplies, and this will be the allowable element.
• Business insurance
• Repairs to business equipment
• Capital allowances (wear and tear) on business equipment (including computers and peripherals, office furniture and fixtures such as shelving etc).
• Printing, stationery, postage and advertising
• Computer software used for business
• Travelling and subsistence costs (a whole topic in its own right). Subsistence relates to the expenses incurred for ourselves only. Any entertaining of suppliers, business associates and, even, customers is totally disallowable.
Motor expenses of running business vehicles (less any personal element)"

Tomorrow, Moving On...
Alan also runs a useful blog which is well worth a browse.

The business of shedworking - part 2

Today Alan Young of 1st Addition Accountancy continues his daily look at the business side of shedworking in the UK. Here's his post on Running The Business:

"As I mentioned yesterday, there is some good news and some bad news for shedworkers. This is where the bad news kicks in. Recently introduced legislation now allows home workers to apportion many of the costs of running the home, on a pro rata basis to the business, based on the number of rooms occupied.

"In other words, if we have one room, totally dedicated to business, and four other rooms in the house, we can claim 1/5, or 20% of the costs of running the house, These costs include; rent/mortgage interest, council tax, property insurance, light and heat, water rates, cleaning, decorating and repairs (internal and external). Because our garden building is not officially classified as a part of the house, we are unable to claim a part of these general expenses for business purposes."

Tomorrow, the good news...
Alan also runs a useful blog which is well worth a browse.

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.

Garden offices - tax news

The clued-up folk at Enterprise Nation have an interesting post about changing rules on expenses for homeworkers. Tax experts Greenwood Wilson in their latest newsletter say:

"HMRC have now revised their guidelines for self-employed persons working from home and claiming for the cost of using a home office. Prior to the new guidelines, which effectively apply from the 6 April 2005, the Revenue could challenge claims for the business use of home facilities unless the area allocated to business use was used exclusively for business purposes. They have now conceded that: 'If an expense is incurred for more than one purpose, we will not prohibit a deduction for any identifiable proportion of the expense which is incurred wholly or exclusively for the purposes of the trade.'

"So if you had a spare bedroom set up as an office, and part of the time it was used as a business facility and at other times as a place where your children did their homework, then you would be allowed to claim for the identifiable costs when it was being used as a business office. But beware - if the room has two desks one of which is used for business, and at the same time the other is used for non-business purposes, then tax relief could be denied! HMRC have also accepted that an estimated £2 per week is a reasonable cost for the business use of home facilities - this is now in line with the £2 a week that can be claimed by employees working at home."

I asked Martin Little from Greenwood Wilson how this affected shedworkers in garden offices. "I see no reason why this shouldn't be treated in exactly the same way," he says. "Depending on the size, permanency and foundations there may be an opportunity to claim capital allowances on the shed, but I should imagine this would not apply with the 'larger' types of shed you would be using. This would apply mostly to smaller, moveable sheds."

Working from home with children

After solving the problem of deciding whether to wear slippers or shoes to homework, the next major obstacle for many homeworkers is combining any kind of efficient working with childcare (a problem which now faces increasing numbers of fathers as well as mothers). This article by Danielle Hollister, How To Entertain A Child While Working From A Home Office, makes a wide range of suggestions which creditably don't include parking your little one in front of Mary Poppins. There's also some good advice, and plenty of comments from other readers too, by Dane Carlson at his Business Opportunities Weblog, by Kelly Ling at her Girls Will Be Girls site, and here at the US National Federation of Independent Business.

Safe wireless working

As I've been increasingly working wirelessly over the last few weeks, I was pleased to see that Byestart.co.uk, the small business portal, has this Guide to working securely with wireless on its impressive web site. The advice comes from Maria Cappella, managing director at ISP Nildram, who looks at:
> Anti-Virus software
> Encryption
> SSID (making the wireless network invisible to unauthorised users by using a service set identifier (SSID).
> Firewalls
> Updating default settings

Virtual office faq

If you're confused about the different types of virtual office, there's a good rundown of the three main species at Eirepreneur, an always interesting blog about 'doing microbusiness in Ireland' which was originally written as a comment by Infurious. Essentially (if I've understood it correctly) a serviced office is a real office with most services provided that you rent out on a short contract, a virtual office is the services without the bricks and mortar bit, and a 'Bedouin workspace' is the bricks and mortar and the services but you just turn up and use what you need when you need it.

Employess and homeworking faq

If you're an employee looking for information about the ins, outs and mustdos of homeworking, there's plenty of good (if often sometimes very basic) information at the Business Link web site including sections on:
> What to check before starting a work at home business
> UK building regulations and planning permission
> Tax considerations of working from home
> Home working health and safety risk assessment
> Segregation of work area when working from home
> Work equipment and workstation setup
> Hazardous substances and working from home
> Emergencies
> Advantages and disadvantages of working from home
> Here's how I ensured that my home was safe for use as a workplace

Employers and homeworking faq

If you're an employer looking for information about the ins, outs and mustdos of homeworking, there's plenty of good (if often sometimes very basic) information at the Business Link web site including sections on:
> Advantages and disadvantages of employees working at home
> Types of work and skills suited to home working
> Employment contracts and working from or at home
> Kitting out people who work at home
> Manage employees who work from home
> Your health and safety obligations towards home workers
> How technology can facilitate working from home
> Responsibilities of home workers
> Here's how I manage the performance of my home workers and keep them motivated

There's also a DTI guidance leaflet on teleworking available as a pdf here and something similar from ACAS here.

Homeworking in your loft

If the idea of a garden office isn't tempting for whatever reason, the possibility of using/converting your loft space will probably be among your first thoughts if you're considering homeworking. An excellent rundown of points to consider by Mark Brinkley at the Homebuilding Show site here which looks at:
* Loft conversion suitability assessment
* Loft conversions and planning issues
* Building regulations
* Loft conversion build routes
* Loft conversion costs
* Using the roof space in your self build home
* Useful loft conversion contacts
It's worth having a look around the rest of the site too which is really informative and clearly written. There are Homebuilding and Renovating Shows around the country throughout the year - the next one is at the NEC Birmingham 22-25 March 2007.

Celebrity sheds

Various famous people are strongly associated with sheds/garden offices, mainly writers. Among them are:
* Philip Pullman, author of His Dark Materials trilogy
* Dylan Thomas, author of Under Milk Wood (his shed is pictured)
* William S. Harley and Arthur Davidson, creator of the famous motorcycle
* Roald Dahl, author of Charlie and the Chocolate Factory
* George Bernard Shaw, author of Pygmalion
* Agatha Christie, author of And Then There Were None
* Henry Williamson, author of Tarka the Otter
* Arthur Miller, author of Death of a Salesman (he built the shed specifically to write it in)
Virginia Woolf, author of A Room of one’s Own

Garden office plannng permission - a supplier's view

Lynn Fotheringham of garden office suppliers InsideOut Buildings (one of our listed suppliers in the lefthand column) was kind enough to send her thoughts on the issue of planning permission to this site following yesterday's post. They cover the main questions that her clients regularly ask before purchasing a garden building. Her comments are below:

Further to your concerns about planning permission for garden buildings you may find the FAQ's below useful. Also, any building used for human occupation such as an office,[but not a greenhouse or unheated workshop] with a floor space of between 15sq metres and 30sq metres, if positioned within a metre of the garden boundary also needs a full building regulations application to bring it up to the correct standards of insulation, double glazing, fireproofing etc. Any such building of more than 30sq metres needs building regulations whatever its position.There is a lot of mis-information availabwel on the internet about garden buildings and their regulation.

Puzzled By Planning Permission for Garden Offices? Here Are The Answers To The Top Ten FAQ.

1. “What type of garden building can I build without planning permission?” Many types of garden buildings, including garden offices, sheds and greenhouses don’t need planning permission under normal circumstances. However there are situations where an office in the garden, a summerhouse, pool house or even a shed needs planning permission.

2. “Under what circumstances will my office or other garden building need planning permission?” It will need PP if it falls into one or more of the following categories: - A. If you live in an AONB, Conservation Area, National Park, Norfolk Broads or a listed building you will need PP for any structure with a volume greater than 10 cubic metres. B. The building is for other than domestic use. For example, you may not need planning permission for a personal home office, but if you want an office in which you intend to employ other people you may need PP. c. If the building has a monopitch roof and is more than 3m high or a ridged roof and is more than 4m high. D. If your garden building is within 20 metres of a highway or footpath and closer to that highway or footpath than your house is. Typically this situation occurs if you live on a corner or have a lane or footpath running past the bottom of your garden. E. If more than 50% of your garden will be covered with outbuildings.

3. “I thought garden buildings were temporary buildings and hence didn’t need planning permission?” A temporary building is a building that would be in one place for less than 28 days.

4. “I thought small building such as sheds or garden offices never needed planning permission?” Planning permission is less about building size or type and more about location. See point 2, above.

5. “I think my garden building may need planning permission. Where can I get further advice?” Help and advice is available from three sources: - 1)Your local planning dept. 2)An architect. 3) A planning consultant.

6. “The company supplying me with my garden office building assures me that it will be OK if I don’t bother about planning permission. Is their word enough?” It is your responsibility as the householder to find out if PP is needed. A reputable company should be willing to make a planning application on your behalf, as part of their service.

7. “What will happen if I don’t get the correct permissions for my garden building?” Your local planning department has the power to order you to take the building down or halt the construction until PP has been obtained. A building without the appropriate permissions could cause problems if you want to sell your house.

8. “If I have to apply for planning permission will I get it?” Each case is considered on it’s own merits, but over 80% of all planning applications are approved.

9. “How long does it take to get planning permission?” All planning departments aim to determine your application within 8 weeks.

10. “ Will I have to employ a professional to fill in my application form?” Planning departments accept planning applications from householders. The Householder application form is straightforward and your planning dept. will advise you on filling it in.

Wi-fi homeworking - health hazard?

I've just gone wireless in my shed/garden office and have been childishly excited about the prospect of teleworking from my sofa (and a friend of mine tells me her husband has taken to working wirelessly from the toilet instead of taking the newspaper in with him). So far it's worked marvellously well (I'm on a BT Home Hub network) but another friend raised the question this morning of possible wi-fi health hazards. The issue was covered briefly earlier this week in The Times and there's a nice round-up piece with links to other articles at Wi-Fi Networking News.

FAQ - health and safety for homeworkers

The Health and Safety Executive have a pdf document here outlining general guidance for employers and employees about homeworking issues. It's not too long and well worth having a flick through. There's a much longer and rather more serious report with case studies, again in pdf format, here. There is also this comprehensive guide from Business Link.

Homeworking/shedworking faq

If you're thinking of homeworking and/or buying a garden office there are hundreds of sites offering you information. Obviously you'll want to hunt around but here are some good first tries. Overall I'd recommend Enterprise Nation as your first point of call. For more details about individual garden offices, you'll need to click on the suppliers' links on the left hand side. Please let me know if you'd like to recommend other sites/pages.


Why work at home?
Why work at home?2
What is a garden office?
Planning permission
Government booklet on planning
A greener way of working
A greener way of working 2
Increase the value of your home
Financial aspects of homeworking
Homeworking insurance
Drawing up a company homeworking policy
IT issues
Live/work lifestyle
Inspirational photos