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We would like to add an extension to our house which we will use as an office. Can we expense the cost of the extension through our limited company and claim tax relief on the cost of the build?

27/02/2024

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Question

We would like to add an extension to our house which we will use as an office. Can we expense the cost of the extension through our limited company and claim tax relief on the cost of the build? Can any of it be expensed as it will be used ultimately for office space?

Answer

An extension to a house owned by a director must not be charged through the company as this would jeopardise the capital gains tax free status of the property.

There are things that can be claimed though;

• Any office furniture such as desks, chairs.
• Storage such as filing cabinets or shelving but not any fixed structures such as built in cupboards.
• Flooring as long as it is moveable.
• Lighting as long as it is moveable.

VAT can also be reclaimed on these items.

You should also be aware that HMRC require any room in your home that is being claimed as an office to also be used for personal purposes. That could be personal storage or sofa-bed for guests – anything so that it is not 100% business use. If it was 100% business use that can also disrupt the capital gains tax free status.