tax relief on studio build

drgibbo

Hi, I hope someone out there can help...i've recently started out as a freelance photographer and have built a purpose made studio in my garden...it's a permanent wooden construction that's been designed purely for business use. I've not obtained planning permission as it fits within the requirements for a single story construction.
I was under the impression that I may be able to claim back a percentage of the construction costs, has anyone done a similar thing?

Mahmood_Reza

The studio that has been constructed would seem to be a functional asset (ie plant and machinery') for your photography trade, on this basis you would be eligible to claim up to 100% of the costs (£100K now, £25K post April 2012).

olivetti

Mahmood and Jimmo are wrong. This sounds like a building and depending on the construction would not qualify for capital allowances. Buildings and structures are not eligible to capital allowances. The only buildings that tend to qualify are those such as portacabins as long as they are moved from site to site regularly. If this is akin to a high quality shed in your garden then it is a building/structure and won't be allowable as a deduction against your taxable income.

For more guidance look at List A, B & C at s.21-23 CAA 2001:
http://www.opsi.gov.uk/RevisedStatutes/Acts/ukpga/2001/cukpga_20010002_en_3#pt2-ch3-pb1-l1g21

However other plant and machinery will qualify as long as it is used at least partly in the trade:

http://www.hmrc.gov.uk/manuals/pimmanual/pim3010.htm

chrismac1

permanent wooden construction

This sounds very much like a Building to me and hence no capital allowances.

However, if I were your accountant I would look to claim full capital allowances on every internal fixture and fitting I could, and also clearly on your photographic equipment. There is no legal definition of "plant" but a hundred years plus of case law which is being added to all the time - for example one recent one featured very complex and detailed arguments about whether the fittings attached to Wetherspoons pubs are part of the fabric of the building - 0% allowances - or part of the equipment with which the business is carried on (plant) - 100% allowances potentially.

My policy in dealing with clients who have this sort of outbuilding is:

1. Identify things which are clearly the building and treat as such.
2. Identify things which are clearly plant and claim the allowances.
3. Identify things which are potentially either. Document the case for claiming the allowances and claim them. Be aware of the risks, and make the client aware of the risks.

If big money is involved in item 3, consider using the HMRC Clearances team at Southend - which is the only part of HMRC who'll respond within a month - to get their official ruling on the matter, ideally before spending the money.