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converting garage

  • 41 posts
  • # 114864

I have a client who is a sole trader and wishes to convert he her garage into a beauty salon and work from home. Can anyone guide me on what expenses are allowable or capital allowance. This may effect the value of the house even if it is just plastering and rewiring, so are there any capital gain implications?


Many Thanks


Tony

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  • 27 posts
  • # 114878

Hi Tony

Roughly speaking, any costs that are incurred in the conversion would be considered capital costs (capital allowances) and any ongoing costs would be revenue costs (expenses)

Here is some more info from HMRC on allowable expenses & how to apportion them when there is no separate cost to the business from personal cost www.gov.uk/expenses-if-youre-self-employed/overview

Hope this helps

Lisa

  • Associate PM.Dip
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  • 53 posts
  • # 114885

There are 2 issues here:

1. I am assuming that the house that the garage is part of is personally owned by your client rather than by the business. Capital allowances therefore does not arise at all in terms of the cost of improvement to the garage that will add value to the property. However plant and equipment or fixtures and fittings that will be used for the business may qualify for capital allowances.

2. Even if the business owned the house, the cost of making improvement to the garage, though capital expenditure, does not qualify for capital allowance as you can't claim capital allowance for buildings unless they are in a 'disadvantaged area' (see https://www.gov.uk/guidance/business-premises-renovation-allowance-bpra).

  • Fellow
  • Practice Licence
  • 27 posts
  • # 114886

The cost of the conversion that is to adapt the garage specifically for business use will be allowable

 

  • 41 posts
  • # 114890

Thanks for the replies. there are still a few grey areas, such as plastering walls which would be for the business but also could increase the value of the property.

Thanks again


Tony

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