Building business premises on personal property

perrita

Hello

I own a property which has quite a bit of land on it, including some disused/run down outbuildings. I was thinking that (planning permission approval assumed) I could convert one of these to use as an office and store for my business.

My question is, if I did this, are there any financial benefits to me personally? For example, could I own the building and rent it to my business (so would be paying myself rent through the business to my personal account) or could I sell the land and disused building to the business? Or failing either of those, could I at least pay to convert the existing building to the office through the business? If it is possible, is it worth it or would there be too many things like landlord insurance making it pointless?

Thanks in advance for any help you could give me!

HappyMJ

perrita wrote: »

Hello

I own a property which has quite a bit of land on it, including some disused/run down outbuildings. I was thinking that (planning permission approval assumed) I could convert one of these to use as an office and store for my business.

My question is, if I did this, are there any financial benefits to me personally? For example, could I own the building and rent it to my business (so would be paying myself rent through the business to my personal account) or could I sell the land and disused building to the business? Or failing either of those, could I at least pay to convert the existing building to the office through the business? If it is possible, is it worth it or would there be too many things like landlord insurance making it pointless?

Thanks in advance for any help you could give me!

Yes you can own the building and rent it to your business.

You would have to pay income tax on the rent received from the business and you may become liable to capital gains tax. The business portion of the property would also become liable to business rates.

Is it worth it? Probably not. You can use your own property for some incidental business use such as an office without having to get planning permission and you can claim a proportion of the household expenses through the business. You can use the simplified expenses method and claim up to £26 per month as an expense saving you £5.20 in tax at 20%.

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim75010

perrita

Hmm yes definitely doesn't seem worth it then. It wouldn't be an option to have the office inside our actual house, we did previously but it's not an option any longer as we need more space and are considering getting a second office staff member but could I pay for the work to convert the building out of the business? And then not bothering with renting it back to myself etc.

paddyrg

Not all benefits are directly immediately financial

If you restore the buildings for an office you
1) Reduce commute time, travel costs
2) Can keep an eye on your office
3) Increase the value of your property
4) Possibly allow you to start letting office/storage space to others as a sideline.

I'm sure you can think of others. I'd say it's worth looking into properly

Savvy_Sue

paddyrg wrote: »

Not all benefits are directly immediately financial

If you restore the buildings for an office you
1) Reduce commute time, travel costs
2) Can keep an eye on your office
3) Increase the value of your property
4) Possibly allow you to start letting office/storage space to others as a sideline.

I'm sure you can think of others. I'd say it's worth looking into properly

I'd agree look into it properly, but include in that

a) would you need planning permission? And if so, would you get it ...
b) would you have to pay business rates on the business part of the property?
c) would you then be liable to pay Capital Gains Tax on the business part of the property when you come to sell?
d) would it make selling the property easier or more difficult?
d) insurance implications ...

You might overcome a - d if you made any 'conversion' dual purpose, ie both office and domestic at different times. But it could get complicated.