Empowering the Freelance Economy

My home office needs a makeover. Can I expense it?

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Q: I want to redecorate my home office since I do a lot of client calls online and informative videos for my business. What can I expense on the business and what would need to be claimed if I sold the house in say 10 years’ time?

A: Generally, redecoration expenses, which are not part of a bigger project involving an improvement, can be allowed as a deduction against business income for tax purposes.  So, the costs of a painter and decorator and materials such as paint, wallpaper etc would be allowable. 

If there is any private use of the office the redecoration costs claimed would need to be reduced in proportion.    If the project includes new furniture or flooring, this may need to be claimed as capital allowances instead, and care needs to be taken with anything that becomes part of the fabric of the building e.g., replacement of a carpet with floor tiles, this wouldn’t be allowable.

HMRC has a certain tolerance and will likely not probe too hard if any such claims if reasonable. However, if the claim is patently unreasonable, a question (or ten) can be expected.

On the sale of the property, if the office is used for both business and private use, there is no effect on the Capital Gains treatment of the sale of the property.  If the home office is solely for business use, then this could affect the entitlement to Private Residence Relief and a liability to Capital Gains tax may arise. 

Any improvements carried out that were previously not allowable as capital expenditure may be claimable as enhancement expenditure if those improvements were still present in the property at the time of sale.

A big thank you goes out to WTT Consulting for providing this expert response

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