Thinking About Building a Home Office?

Date: 18/09/18

Thinking About Building a Home Office?

If you are thinking about building an office at home, or have already done so, you may be wondering what the situation is regarding VAT and other taxes.


Reclaiming VAT

When building a home office, as an extension or as part of a new build, you can reclaim a proportion of the VAT. The amount depends on the % of the time when the office is used for business vs personal use.

For instance, if an office is used for business 75% of the time, then 75% of the VAT may be reclaimed. If the office is to be fitted out with furniture and other fixtures, then 75% of the VAT on these items can also be reclaimed. When it comes to any business equipment purchased, it could be that this only used for business related activity and therefore all the associated VAT can be reclaimed.

Selling your Home

There is good news when selling your home, and therefore the office. As the sale of residential accommodation is exempt, there is no need to account for the VAT originally reclaimed.

 However, be aware that capital gains tax may come into play. Under normal circumstances the sale of a home is exempt but if you have been using part of your property for non-residential purposes you will need to split the gain between the taxable business part and the exempt residential part.  The better news is that if the home office has been used for both business and non-business purposes, capital gains tax can be avoided.

 For advice on this and other tax related matters, please call us on 01524 67111 and a member of our specialist team will be only too pleased to assist.

Susie Campion FCCA

Author: Susie Campion FCCA

Educated at Lancaster Girls' Grammar School, Susie joined Scott & Wilkinson in 1995 and qualifed as an accountant in 2002. As a Partner, Susie’s specialisms include managing the firm's large group audits and leading on staff...

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