Options on building an office in the garden

DawnyDawny Settling In NicelyPosts: 60MAAT, AAT Licensed Accountant
A client will be building an office at the bottom of the garden and will be partly using the space as an office for his limited company.

I am wondering what is the best tax option here. Should he let the company pay for the building and capitalise the cost and apply AIA to any integral features. I realise there may be capital gains on the office but they are not looking to move so shouldn’t be an issue to worry about.

Or, should they pay for the office personally, draw up a license to occupy and charge the company rent.

The company isn’t VAT registered but is cash rich so my client is always looking for ways of withdrawing money from the company.

Thank you for your thoughts.

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