Tax Benefits of a WAH Solutions Home Office

Current tax law is simply not designed to deal with large scale home working and presents many potential pitfalls if not handled well and the key is providing a “moveable” Garden Office as explained below…

 

Why avoid having an “internal home office”

If the “office” is internal to an employee’s house, the following complications come into play:

  • Running costs. It is much harder to allocate utility costs such as WiFi, heat, light, water etc between leisure and business use, making expense claims harder and often resulting in “unfavourable estimates” from HMRC of the benefit-in-kind
  • Capital gains tax. A staff members’ primary residence is exempt from capital gains tax, but any dedicated business space is subject to capital gains based on the percentage of square floor space it represents of the house. Thus, there is a natural conflict in wanting to avoid benefit-in-kind charges by declaring an internal home office as 100% for business use and creating a capital gains liability. A removable Garden office negates this

 

Tax efficiency of Garden Offices

  • Capitalisation. Employers can pay for “removable” Garden Offices and capitalise these on their balance sheets, writing off the cost over a 10-year period. If staff leave the business, the units can be removed and re-allocated to other staff, allowing a longer depreciation period
  • Reclaimable VAT. The 20% VAT costs can be reclaimed by an employer on both initial set up cost and ongoing running costs, which would not be possible for individuals
  • No “benefit-in-kind tax” for staff. Having a dedicated and removable “Garden Office”, if staff sign a waiver to state it is solely used for business purpose, makes it 100% clear that no benefit-in-kind tax will be applied by HMRC
  • Movability avoids capital gains tax. Because the Garden Office is removable, then simply remove the office before selling the house and avoid all capital gain tax complications. Obviously, the office can also easily be moved to the new house avoiding any further expense for the employer
  • Quality of environment. A dedicated workspace allows employers to cover all business-related costs such as broadband WiFi, printer costs and quality ergonomic office furniture