**Newly self employed with workshop on our home grounds**

Lisa1978

Morning All, 

We have built a workshop in our garden from which my husband is doing some self employed work.  I have read that mortgage interest can be a deductible expense.  Can someone please advise? I am assuming it would only be a % of our overall mortgage interest and is there a good way of calculating same? Also is this only available if you work 'from inside the home' rather than in outbuildings on our site? Thank you. 

Jeremy535897

The general issue of expenses for the self employed working from home is discussed here:
https://www.gov.uk/expenses-if-youre-self-employed

Unless the mortgage was used to build the workshop, there would be no relief in respect of it.

Lisa1978

Thank you.  No we have lived there a number of years with a mortgage but decided to build the workshop. 

Pennywise

The simplest way is just to use HMRC's simplified expense allowances which are based on average number of hours working from home for the self employment - https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home so between £10 to £26 per month,

Or the more complicated method:-

"If you work from home

You may be able to claim a proportion of your costs for things like:

• heating
• electricity
• Council Tax
• mortgage interest or rent
• internet and telephone use

You’ll need to find a reasonable method of dividing your costs, for example by the number of rooms you use for business or the amount of time you spend working from home."

Jeremy535897

Pennywise said:

The simplest way is just to use HMRC's simplified expense allowances which are based on average number of hours working from home for the self employment - https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home so between £10 to £26 per month,

Or the more complicated method:-

"If you work from home

You may be able to claim a proportion of your costs for things like:

• heating
• electricity
• Council Tax
• mortgage interest or rent
• internet and telephone use

You’ll need to find a reasonable method of dividing your costs, for example by the number of rooms you use for business or the amount of time you spend working from home."

The problem with a dedicated outbuilding built after the house was acquired is that the mortgage has nothing to do with it, and the council tax won't have changed because of it. That just leaves the costs of heating, electricity etc. Internet probably hasn't increased, but telephone costs probably have.

If there happened to be some plant (certain electrical and water supply works) involved in the construction, there may be modest scope for a capital allowances claim. See https://www.gov.uk/capital-allowances/what-you-can-claim-on

No claim for SBA for the structure is permitted as it is in the grounds of a residence.

lincroft1710

If the workshop is used purely for business purposes, there is a possibility it could attract a Non Domestic Rating Assessment.

seatbeltnoob

lincroft1710 said:

If the workshop is used purely for business purposes, there is a possibility it could attract a Non Domestic Rating Assessment.

catch 22, when councils are facing budgeting issues and have budgets cut by central government they often do go out and target all these home based businesses workout of a shed.

it only takes 1 complaint by a miserable neighbour to get the council to go round and investigate.

Jeremy535897

seatbeltnoob said:

lincroft1710 said:

If the workshop is used purely for business purposes, there is a possibility it could attract a Non Domestic Rating Assessment.

catch 22, when councils are facing budgeting issues and have budgets cut by central government they often do go out and target all these home based businesses workout of a shed.

it only takes 1 complaint by a miserable neighbour to get the council to go round and investigate.

Small business rate relief would generally make this a pointless exercise for the council.

Pennywise

seatbeltnoob said:

lincroft1710 said:

If the workshop is used purely for business purposes, there is a possibility it could attract a Non Domestic Rating Assessment.

catch 22, when councils are facing budgeting issues and have budgets cut by central government they often do go out and target all these home based businesses workout of a shed.

it only takes 1 complaint by a miserable neighbour to get the council to go round and investigate.

As Jeremy says, most would have a "zero" business rates bill because of the small business rate relief.

However, it's not all bad anyway.  Lots of the tiniest of "businesses" got £10k in business grants, including the likes of garden sheds categorised as "business premises" due to the covid grants.  In fact, there were huge numbers of Air BNB holiday home owners clamouring to get their (previously unregistered) second homes categorised as business premises to get their £10k grants along with a multitude of other previously unregistered business premises.  One of my clients rented what can only be described as a tiny hovel in the grounds of a stately home to run a hobby pottery - they registered for business rates to get the £10k.  Of course, highly unlikely anything like that would happen again - we'd have to hope the Chancellor would do a better job of targetting aid to those who needed it if we had another pandemic or similar in the future!