Experts have been reminding the new work from home crowd that creating a new business space, can be viewed as a business premise rather than a place of leisure. And, if that the case it could be taxable!
Remember, while capital gains tax is not levied on the sale of your main home, it can be applied to any part of the home used “exclusively for the purpose of a trade business, profession, or vocation.”
People who have built a shed to work in their back garden during the lockdown are particularly at risk here. Some accountants have even suggested you should avoid bragging online about any newly built or adapted office space.
There is a way to avoid the taxman, however. Make sure you use the space for ‘chillaxing’ as well as working. HMRC says a room or shed will only be taxed if it is ‘exclusively’ used for work. So, maybe it's time to put in a sofa and exercise bike or hand it over to the kids at the weekend.
