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TLC Loves… getting a tax break on decorating and furnishing your home office

Many of our clients work from home offices and will be used to filling in our use-of-home spreadsheet which adds up the overheads such as heating and lighting that you can claim a proportion of against corporation tax.

But did you know that you can also claim expenses against your tax liabilities for furnishing your office?

One simple rule…

There’s a simple rule to help you understand what can be claimed – if you can relocate it to another office, it’s a legitimate expense.

So if your office is your spare room, you can’t claim the cost of paint, carpet or a new radiator against your tax bill, but can you can claim for decorative accessories and furniture exclusively used by the business.

The business can still fund the decoration, but you won’t be able to reduce the tax bill by using the expenses against it.  The costs are personal and will be dealt with through your director’s loan account. (Take a look at our handy explanation about director’s loan accounts here.)

Pitfalls of home offices

What you do need to be careful about is incurring capital gains tax or business rates if you use a part of your home exclusively for work.

In practice, this means you need to make sure the room you use also has a personal use, whether that’s putting a TV or exercise bike in the corner, or making it available for the rest of the family to use as a study.

Otherwise you may end up paying capital gains tax when you sell your home where you have exclusive business use.

If you sell things to people who visit your home, or have people work for you in your home office you could also become eligible to pay business rates on your home office.

As with most things, it’s best to check with us about your own situation so we can provide personalised advice at the time it’s relevant.

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