Home office conversion costs

Home office conversion costs

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Query regarding a director who comverted his attic from a derelict room into a room that is used pretty much exclusively as a home office. He has a licence agreement between himself and the company to effectively claim use of home as office such as light, heat, council tax etc.

He carried out the attic conversion himself and typical costs included floorboards, plasterboard, minor electrics (extra sockets, lights etc), plumbing for a sink, replacement radiator, paint and other decorating expenses, as well as a few specific tools such as floor nailer etc. Overall cost is about £2k.

It's my understanding that if work is undertaken on a room that is effectively a home office then that can be counted as an allowable expense (example I'm thinking of is replacement window, minor repairs, decorating), subject to say a 10% private use element.

Would be grateful for peoples thoughts, the risk is that the 'rent' in the accounts will not be in line with current or future years so just want to be sure of the position should it be queried.

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By tonyaustin
10th Jul 2012 12:40

Attic conversion

Conversion of the attic is capital expenditure and so there is no tax relief (unless there is a chargeable gain when the property is sold).

As for the running costs, are they reimbursed or is the loft rented to the company? The tax treatment of expenses could be different. HMRC offer quite clear guidance now on home / office expenses.

Otherwise, you should seek advice from an independent tax consultant (such as myself), who can advise on one-off situations that other accountants have with their clients

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