For many creative entrepreneurs, the dream of a garden office is strong: a bright, stylish studio just a few steps from your back door, away from kitchen-table chaos and full of natural light for shoots, editing, or design work. But when it comes to tax, that dream can turn into a maze. The rules are not as generous as Instagram might have you believe.
Imagine this: you’re freelancing as a designer or filmmaker. In January you order a sleek garden studio in your own name, thinking it’ll be the perfect HQ when you incorporate later. In February you form your limited company and in March you register it for VAT. You naturally assume the company can claim the VAT back. Unfortunately, it can’t. Why? Because the company didn’t exist when the office was bought and the invoice isn’t in its name. For tax purposes, a company and its director are two separate people. Only the person named on the invoice can reclaim the VAT.
Even if you do get the paperwork right and the company pays for the studio itself, the tax breaks on the structure are surprisingly thin. HMRC treat a garden office at your home as part of your house, not as business plant or equipment. That means there’s no up-front Annual Investment Allowance and, unlike commercial premises, you can’t claim the government’s “structures and buildings allowance” either. In plain English: you don’t get a big tax deduction for the cost of the building itself.
All is not lost, though. The bits inside the building – the electrics, lighting, heating, built-in fittings – are treated differently. These are classed as “fixtures” and can usually be written off against profits much more quickly, often in full in the year you buy them. So when you budget, it’s worth asking your supplier for a breakdown between the building and the fixtures so your accountant can claim what is legitimately available.
If you’re a sole trader rather than a company, the picture is a little simpler because you and your business are legally the same person. An invoice in your name is fine, and if you’re VAT-registered you may be able to reclaim the VAT, although you’ll need to restrict it if there’s any private use. But you still face the same basic limit: no relief on the structure itself, only on the internal fixtures.
There’s another wrinkle: if any part of your home is used exclusively for business, you could lose some of your Capital Gains Tax exemption when you sell. Using the office mostly for business but keeping some personal use can protect that relief. This is worth discussing before you make claims that look “all business” on paper.
So what’s the takeaway? Before you order a garden studio for your creative business, decide who’s going to buy it, get the invoice in the right name, and manage your expectations about tax relief. The VAT is only recoverable if the business itself incurs it, and the building itself won’t give you a big tax write-off. The real savings lie in the fixtures, good record-keeping, and getting advice up-front so you don’t accidentally shut the door on a relief you were hoping for.