Tax warning over ‘Covid offices’

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Due to the current pandemic many business owners have now found themselves working from home.

Due to lack of space or privacy many business owners have opted to create the ‘ultimate’ home office in their garden in the form of a shed.

Nick Charnley, tax manager at Ellis & Co Chartered Accountants is warning workers that their new space may be viewed as a business premises, should they come to sell their homes.

“Using a shed in your garden as sole for use as your office could be viewed as a business premises by HM Revenue & Customs when you came to sell your house,” said Nick.

“Capital Gains Tax is applied to any part of your home used for the purpose of the business.

“So if you were to sell your home and had been using that garden office solely for business use, Principle Private Residence relief (the capital gains tax exemption that is applied to our main homes)  may not apply to the proportion of the property that is occupied by the office/shed.

“My advice would be to ensure you used your shed for other purposes too e.g. for leisure or storage.”

For further information on this or any other tax matter contact Nick on 01244 343504.