Self Employed - Building Loft Extension....

astrobhoy

hi all,

I'm self a self employed graphic designer. We're building a loft extension, of which part of it is going to be my office. Do you know can i write any of it off in tax, or will it just be the fittings (office tables, chairs etc) that i can only write off? Any advice would be most appreciated.

Thanks

Martin

Tiggs_2

just doing this for my garage - as i understand it i will only be able to off set decorating onwards.

i would imagine off setting construction costs would lead to all sorts of issues with CGT on that % of the house, etc, etc

be interested in an accounatnts view?

WHA

There is no tax relief against profits on any building - it is an appreciating asset. You would set the cost against the capital gains tax on eventual sale. What you need is to claim capital allowances on fixtures and fittings but this is a specialist area as there are some pretty strange rules as to what F&F are allowable so talking to an accountant would be wise. Yes, it is also more complicated as it is an improvement to your home, rather than business premises, so if you claim too much it may jeopardise the CGT-free status of your home and you may end up doing some quite complex calculations when you sell your home (although probably no tax liability at the end of it). If you are trading as a limited company, the company can rent the loft from you and pay a commercial rate - theoretically, you are liable to tax on the rent received, but should be able to claim interest relief on the improvement cost and proportions of household expenses, such as power etc.

astrobhoy

Thanks for that chaps, i thought that would be the case.

cheers

Martin

johnllew

WHA wrote:

There is no tax relief against profits on any building

That's a bit broad - what about Industrial Buildings Allowance?

Petmidget

Or Business Premises Renovation Allowance, that has an element of capital.

tee hee in a facetious mood

linlin_3

As stated previously, if you try to offset any building costs, you'd end up being liable for CGT. It is for this reason you should never calculate any costs based on the number of rooms in your house.
Things you can claim:
Decorating, fixtures & fittings, furniture, carpet, curtains, computers. If you use the room for any private purpose, you should only be claiming a proportion.
For fairly small self-employed businesses, I would personally claim any single items under £3-400 in your profit and loss as repairs and renewals. Make sure you can substantiate the total with receipts by the year end. Items over that sum should be classed as assets of the business and you can claim capital allowances on these at year end. Note that capital allowances for 2005/2006 are 40% but for 2006/2007 they're 100%.......so wait a while before buying anything expensive.
Good luck

astrobhoy

linlin wrote:

Note that capital allowances for 2005/2006 are 40% but for 2006/2007 they're 100%.......so wait a while before buying anything expensive.
Good luck

That's great advice - thanks. Did you mean 2007/2008 though with this last bit?

Cheers

Martin