Private workshop for sole trader

jowebber Registered Posts: 7 Regular contributor ⭐ ? ⭐
Hi all

A person has built a workshop in his own back garden specifically to manufacture items for sale. Can anyone advise the best way to enter this into his books once he starts trading. Would it be better to enter all costs for building material and labour as an initial layout cost, thus then having a fixed asset or rent the workshop to himself under the same principal as you would rent office space within your home and not entering the inital layout costs at all in the books.


  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    He has built an outbuilding on his property. This forms part of the property and (assuming it's done well!) will enhance the value of his property.

    To my mind this is like having a garden shed office - the building itself forms the setting in which the trade is carried out and thus does not qualify for capital allowances.

    If he is a sole trader, he can't rent the space to himself (he would have to declare the rental income on his tax return anyway). He can increase his use of home allowance in proportion with the use of it (electric etc) and can claim for anything that turns a bare room into a workshop (benches, tools, lighting etc).

    Bottom line: I really doubt he can claim for the costs of construction.
  • jowebber
    jowebber Registered Posts: 7 Regular contributor ⭐ ? ⭐
    Thank you monsoon that makes things clearer
  • T.C.
    T.C. Registered, Tutor Posts: 1,448
    To keep things straight forward with regard to planning permission and CGT I would just have a higher 'use of home' allowance.
  • jowebber
    jowebber Registered Posts: 7 Regular contributor ⭐ ? ⭐
    Thank you TC
  • vikesh92
    vikesh92 Registered Posts: 2 New contributor ?
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