Separate Electric Meter for Garden Office used for Business

DevonFella

My wife is a counsellor and we have converted our garage into her studio. Heating is by an electric oil filled radiator. With the cost of running it escalating am wondering whether if it was separately metered, she could at least claim it as a running cost against tax? Anyone had experience of this??

MWT

Short answer is yes, but she should talk to her accountant for the details about what and how to claim for expenses wholly and necessarily incurred in the course of her business. 

pochase

Not sure if this will make sense as the cost for energy for businesses is much higher. 

I suggest you check what business tariff is available and compare the extra cost it against the tax savings.

MWT

pochase said:

Not sure if this will make sense as the cost for energy for businesses is much higher. 

I suggest you check what business tariff is available and compare the extra cost it against the tax savings.

As long as the business use is incidental to the domestic use there is no requirement to change tariff, so a sub-meter or if adequately spec'd just a method of recording the use for the one heater would be acceptable.

pramsay13

I have a garden workshop which I have worked out is 1 / 11th of the space of my house so I divvy up household bills accordingly and claim them as expenses to run my business. 

MWT

pramsay13 said:

I have a garden workshop which I have worked out is 1 / 11th of the space of my house so I divvy up household bills accordingly and claim them as expenses to run my business. 

That can work too, but really it is a question for her accountant as it is important to maintain consistency with the methods currently being used for any other business expenses she is reclaiming...

QrizB

MWT said:

pochase said:

Not sure if this will make sense as the cost for energy for businesses is much higher.
I suggest you check what business tariff is available and compare the extra cost it against the tax savings.

As long as the business use is incidental to the domestic use there is no requirement to change tariff, so a sub-meter or if adequately spec'd just a method of recording the use for the one heater would be acceptable.

Agreed, a MID-compliant meter costs less than £25 and shouldn't take an electrician very long to fit.

Uxb1

I recall also that there may be GCT implications if part of the home is used solely for business when you (eventually) come to sell.
Your main home is exempt for GCT on sale provided is it used as a private residence.
If part is a business only section that will no longer apply to the part of the house that is solely used for the business and CGT would have to be paid on that part (garage/garden office in your case)

....all of which is why many go to great lengths to ensure that no part of the house is only used for business.

Section62

Uxb1 said:

....all of which is why many go to great lengths to ensure that no part of the house is only used for business.

There could also be planning issues if that hasn't been addressed already.

Also worth asking the accountant to confirm the VAT situation.

DevonFella

pramsay13 said:

I have a garden workshop which I have worked out is 1 / 11th of the space of my house so I divvy up household bills accordingly and claim them as expenses to run my business. 

As electricity costs have escalated so substantially our thinking is to be able to set off the cost of heating her counselling studio. (Our house is heated by gas)

DevonFella

Uxb1 said:

I recall also that there may be GCT implications if part of the home is used solely for business when you (eventually) come to sell.
Your main home is exempt for GCT on sale provided is it used as a private residence.
If part is a business only section that will no longer apply to the part of the house that is solely used for the business and CGT would have to be paid on that part (garage/garden office in your case)

....all of which is why many go to great lengths to ensure that no part of the house is only used for business.

Thanks for that. The space is also used as a 'garden room' so hopefully wont get caught in that tax trap!