For many people, working from home has offered distinct benefits, saving time and money with improvements to work-life balance. Employers’ initial fears about productivity have been allayed with 71% of business owners reporting that having staff at home either boosted productivity or made little difference (source: CIPD).

It’s a fact: home working is here to stay. However it doesn’t suit everyone. Suitable space is often an issue, particularly when employees share their home environments during working hours. If you have enough outside space there’s an ideal solution… a garden office.

The growth of garden building sales is amazing. Sales rocketed by 500% between January and May 2021, compared with a year earlier (source: Toolstation).

Is a garden office for you? If so, there are some key accounting issues that you should be aware of:

1. Business Rates

  • You may need to pay business rates if:
  • your property is part business and part domestic, for example if you live above your shop
  • you sell goods or services to people who visit your property
  • you employ other people to work at your property
  • you’ve made changes to your home for your business, for example converted a garage to a hairdresser’s

“If business rates are applicable, then it may be possible to mitigate the costs with small business rates relief,” explains Accountingweb. “This reduces the charge to nil provided that the business only uses one property, and the rateable value of that property is less than £15,000.”

2. Running Costs

You can recover your garden office business-related running costs via one of two approaches: rental charges or expense recharge. The right accounting route for your business will depend on several factors, such as if your business is incorporated, whether you have a mortgage, and if your property is jointly owned.

3. Equipment Costs

Assuming that insignificant private use is involved, businesses can claim capital allowances on the cost of furnishings and equipment.

4. Capital Gains Tax

If your garden office is not 100% dedicated to business use, it should not affect your Private Residence relief when you come to sell your property. Many garden workspaces are used as hobby, fitness or ‘time out’ areas.

“Home working has become an attractive, viable option for many businesses,” says Emily Bridges of re:accounts in Stevenage, Herts. “However some people simply don’t have the right home environment for this option to work well. A garden office could be an ideal way forward.”

Are you or any of your employees thinking of investing in a garden office?

Contact the accounting experts at re:accounts. Chat through the options without any commitment involved. Let’s talk!