Posh Garden Shed Office - You Know Where This Is Heading!

JamesB Registered Posts: 51 ? ? ?
Evening all,

so I have been scanning the many forums around the web about the tax rules on this. I am getting closer to a definitive answer but would love to discuss it on here to get closure on the matter!!

So the glorified shed is moveable, will sit at the bottom of the garden and will be used as a business office for a Ltd co. Here is my understanding of the tax implications, I would really appreciate someone to agree/question/counter argue etc so I can get some clarification!

1) the shell (ie walls, roof, door etc so pretty much the cost of the shed itself) is a capital item and can be in the accounts under plant and machinery. It is plant and machinery as opposed to a building as it can be easily moved, it is not fixed like brick walls.

No capital allowances are available though as the shed forms the setting in which the trade is carried out (ie it is the office). If it was a warehouse or a workshop capital allowances would be available.

2) the fixtures and fittings, wiring etc qualify for capital allowances under P&M or F&F.

3) VAT can be claimed on the cost of all the above as company is vat registered.

4) No capital gains tax implications - this is because the shed only cost about £8k so the exemption will cover it on a sale, also the market value when they sell the house will be lower than the purchase price so no profit will be made

5) Business rates? - No Mr. Councilman, we also store our books and guitar in the shed, we only use it 95% for business (adjust capital allowances and vat claim accordingly to 95%).

I guess the main area I want 100% clarification on, and would love to know if anyone else has had dealings with HMRC over this, is no capital allowances on the cost of the shed as it is used as an office, as opposed to a warehouse/workshop.

Can't beat a bit of tax!
As always thanks in advance for anyone who takes time to respond.


  • T.C.
    T.C. Registered, Tutor Posts: 1,448
    I can't see why you couldn't claim CA. This is not a 'building', but an item which will depreciate in value. My instinct is to claim CA.
  • burg
    burg Moderator, FMAAT, AAT Licensed Accountant Posts: 1,441
    Agree I would claim CAs as it appears to be plant.

  • deanshepherd
    deanshepherd Registered Posts: 1,809
    It appears to be a building to me.

    I had a posh shed myself and would not claim CAs on it. Have you tried moving one?!

    I also don't see what difference it would make if the shed was used as a workshop or studio.
  • jamesm96
    jamesm96 Registered Posts: 523
    I've always taken the definition of Plant and Machinery to be 'something which forms an active function within a business', as opposed to Land and Building which 'provide the setting in which the business carries on'.

    So I'd also have said no CA's on the shed, but capitalise as much as you can justify as being 'F&F'.
  • JodieR
    JodieR Registered Posts: 1,002
    I'd also say no to CA on the shed, for the reasons you've already stated and also I'm sure I remember hearing that it's not always enough to say that the item in question 'can' be moved, I think that HMRC are allowed to disallow CA where the item isn't ever actually moved.

    Also, if the client does claim VAT on the cost of the shed and then he sells the house and leaves the shed there, then how are you going to account for VAT on the sale of the shed? could get messy.
  • JamesB
    JamesB Registered Posts: 51 ? ? ?
    Thanks for the replies guys,

    It appears to be a mixed bag but I am inclined to lean towards not claiming CA on the cost of the shed just to be on the safe side.

    Thanks again,
  • Anne Boleyn
    Anne Boleyn Registered Posts: 196 ? ? ?
    Capital Allowances


    Just a point with regard to the "moveable buildings" and it isn't that the shed/office can be moved but that it is intended to be moved in the course of the qualifying activity. The example often used is that of builders porta-cabins, they do qualify as they are intended to be moved from site to site as needed. I don't think the shed in the garden will be moved around to different sites to work from.

    Hope this helps.
  • villapb
    villapb Registered Posts: 357
    Just read the CAA2001 REF 277 and confirm the posh shed is excluded..... but if it was used for manufacturing as a qualifying trade it could be, but used as an office makes it excluded...........
  • deanshepherd
    deanshepherd Registered Posts: 1,809
    That section refers to Industrial Buildings Allowance. Wasn't that scrapped a few years ago?
  • villapb
    villapb Registered Posts: 357
    Yeah 2011.........think ill get back to personal tax.........hmmmmm
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