Can I claim expenses for business use of my garden office or shed?

Introduction: why the garden office question matters

If you work for yourself or run a small company, a garden office or converted shed can feel like the perfect solution: it keeps work out of the house, reduces distractions, and avoids the cost of renting separate premises. It also raises a very practical question: can you claim expenses for business use of that space?

The short answer is that it depends on how the space is used, what costs you want to claim, and whether you operate as a sole trader/partnership or through a limited company. There are also important knock-on effects to consider, such as capital gains tax implications when you sell your home, and (in limited cases) business rates or planning considerations. This article explains the core principles and the main methods for claiming allowable costs, with an emphasis on keeping the approach sensible, defensible, and easy to maintain year after year.

What “claiming expenses” really means

When people say “claim expenses,” they usually mean one (or both) of the following:

1) Deducting part of your home running costs against business income, reducing taxable profit (common for sole traders and partnerships).

2) Having a company reimburse you for the business costs of using home (common for directors of limited companies), with the aim that the reimbursement is not treated as taxable income and the company can claim a deduction.

In both cases, the underlying idea is the same: only the business portion of a cost is allowable. The more clearly you can show that a cost is incurred wholly and exclusively for the purposes of the business (or that a clearly measurable portion is), the easier it is to claim.

Key concept: business use versus mixed use

A garden office or shed can be used in a few different ways:

Exclusive business use: the space is used only for the business, never for personal activities. This can strengthen your ability to claim ongoing running costs, but it can create tax complications on sale of the property.

Mixed use: the space is mostly for work, but it is also used personally (for example, as a hobby room in evenings, a guest room occasionally, or storage for household items). Mixed use often reduces the proportion you can claim, but it can also reduce the risk of certain tax consequences that can arise from exclusive business use.

Incidental business use: you occasionally take calls or do a small amount of admin in the space, but it is not truly “used as an office.” In practice, this may support only minimal claims or none at all, depending on the facts.

Many people assume that the stronger the business use, the better. But with a garden office, you also want to avoid creating a situation where part of your home is treated like a separate business asset. In other words, it’s not just about maximising deductions; it’s about balancing deductions with risk and future implications.

Different rules depending on how you operate

Before you calculate anything, be clear on your business structure, because the practical approach differs:

Sole trader or partnership

If you are self-employed (not through a limited company), you generally claim a proportion of household costs as “use of home as office.” This typically covers running costs such as utilities and broadband, and sometimes a share of rent or mortgage interest (not mortgage capital repayments). You can usually choose between a simplified flat-rate method and a detailed actual-cost method, depending on what is more suitable.

Limited company (director/employee working from home)

If you operate through a limited company, the company is a separate legal entity. Your garden office may be on land you personally own, not the company’s. The company can usually pay you a reasonable amount for homeworking costs, or you may claim certain expenses personally, depending on the circumstances. Some costs can be reimbursed without creating a taxable benefit, but you need to be careful: paying yourself “rent” or allowing the company to claim large chunks of household costs can create extra tax and legal complexity.

Types of costs you might want to claim

Expenses connected with a garden office usually fall into four broad categories:

1) Running costs (ongoing bills)

These are the everyday costs of keeping the property operating. Examples include electricity, gas, water, council tax, home insurance, broadband, and general repairs and maintenance. For a garden office, electricity may be the most obvious, particularly if you use heating, lighting, computers, and other equipment.

2) Repairs and maintenance

Repairs are generally about restoring something to its previous condition, not improving it. Replacing a broken lock, fixing a leak, or repainting due to wear and tear are typical repairs. For a garden office, there may be repairs to the structure, doors, windows, or the electrical supply.

3) Capital expenditure (building, renovating, improving)

Building the garden office, adding insulation beyond the original spec, installing new windows where none existed, laying foundations, or extending the structure is capital expenditure. This is not the same as running costs. Capital expenditure is generally not deducted from trading profits in the same way as routine expenses, though relief may be available in other forms depending on what was purchased and who owns it.

4) Equipment and furniture

Desks, chairs, shelving, computers, monitors, and similar items are usually treated as business equipment rather than building-related expenditure. The tax treatment differs from running costs and also differs depending on whether you are self-employed or operating through a company.

Method 1: simplified expenses (typical for sole traders)

Many self-employed people prefer a simplified approach because it is easy and reduces record-keeping. Under a simplified “use of home” method, you claim a flat amount based on the number of hours you work at home each month. This method is designed to cover certain household running costs without needing to calculate room-by-room percentages.

The advantage is simplicity. The downside is that the flat amounts may be lower than what you could claim using actual costs, especially if your garden office is a substantial space used heavily for business and your household costs are high.

If you use simplified expenses, you typically cannot also claim a proportion of actual household running costs for the same category of expenses. The idea is that the simplified amount replaces that detailed calculation.

For people with a garden office, simplified expenses can be attractive if you want to keep things clean and avoid discussions about square footage, apportionment, or personal use. It can also feel more “defensible” because it is standardised, even if it is not optimal financially.

Method 2: actual cost apportionment (more detailed, potentially higher)

The alternative is to claim a proportion of actual household costs. This method requires a reasonable basis for splitting costs between business and personal use. Common approaches include:

Room basis: split the home into rooms, then claim the fraction that relates to the office. For example, if you have 5 rooms and one is used for business, you might start with 1/5 of certain costs, then adjust for time.

Area basis: split by floor area (square meters/feet), which can be more accurate if rooms vary significantly in size. This can be especially relevant where a garden office is a single-purpose structure with a known area.

Time basis: adjust the claim based on how many hours the space is used for business. If the garden office is used for work 8 hours a day, 5 days a week, that is not the same as 24/7 use. Time apportionment is commonly used for costs that fluctuate with usage (like heating and electricity), but may be less relevant for fixed costs (like insurance) depending on your circumstances.

In practice, many people use a hybrid: floor area (or room count) multiplied by time usage. For example: (office area / total area) x (business hours / total hours in period) x total relevant cost. The key is to use a method that makes sense and to apply it consistently.

What costs are usually suitable for apportionment?

Not all costs are treated the same. In a typical “use of home” claim for a garden office, these are commonly considered:

Utilities (electricity, gas, water)

Utilities are often the most straightforward to apportion, especially if the garden office has its own meter or if you can otherwise estimate usage. If there is no separate meter, you can still apportion based on area and time, but be realistic. For example, if the garden office is heated electrically and your main home heating is gas, it may make more sense to apportion electricity for the office and not gas (unless gas is used for other household needs that indirectly support your business use). The more your apportionment reflects reality, the better.

Broadband and phone

If you have a broadband connection used partly for business, you can apportion it. If you have a separate business broadband line to the garden office, that can often be claimed in full (subject to structure and ownership). For phone, itemised business calls can be claimed, or you can apportion a contract if it is genuinely mixed use. Be cautious about claiming the full cost of a personal mobile contract unless the business use is demonstrably dominant or you have a separate business-only line.

Council tax and home insurance

These are fixed household costs. Some people include a proportion of them in a detailed calculation. However, claiming fixed costs can be more sensitive because it draws attention to business use of the home. There is also the practical point that fixed costs do not necessarily increase because you have an office. If you want to keep things conservative, you might focus on variable costs like electricity and heating, plus direct office expenses (repairs to the office, office broadband, etc.).

Mortgage interest or rent

Rent is commonly apportionable for self-employed people. Mortgage interest can also be considered in some contexts, but not the capital element of mortgage repayments. This is an area where people can become overambitious. If you claim a significant proportion of mortgage interest on the basis that the office is exclusively business use, you may increase the risk of future complications when selling the property. Many small business owners prefer a cautious approach here.

Repairs and maintenance

Repairs to the garden office itself may be directly attributable to business use. If a repair is wholly for the office, you may be able to claim it in full (or in proportion if there is mixed use). Repairs to the main house that do not relate to the office are harder to justify as business expenses.

Direct costs versus indirect costs

A helpful way to think about this is to split costs into:

Direct costs: costs that arise only because you have the garden office and use it for business (for example, office-specific electricity supply work, a separate office broadband line, a lock upgrade to secure business equipment, or a repair to the office roof). These are often the easiest to claim because they can be linked clearly to the workspace.

Indirect costs: shared household costs that exist regardless of business use (such as general utilities, council tax, insurance). These can be claimed in part, but usually require apportionment and can attract more scrutiny.

If you want a simple and defensible claim, start by capturing direct costs well, then consider whether adding indirect costs is worth the extra work and complexity.

Capital expenditure: building or buying the garden office

The cost of constructing a garden office or buying a high-end insulated garden room is usually capital expenditure rather than a running cost. That means it typically isn’t deducted from profits in the same way as your electricity bill.

People often assume that “because it’s for business” the entire build cost is immediately deductible. In most cases, it isn’t. The structure is more like part of the property (or an improvement to it) than a consumable expense.

However, some elements of a build may be treated differently depending on what they are. For example, integral features of the building are usually part of the capital cost, while certain items that function as equipment may be treated as plant and machinery rather than as part of the building. The boundary can be technical. As a practical matter, if the build cost is significant, it is worth keeping invoices itemised so you can see what relates to the structure versus what relates to equipment installed within it.

For limited companies in particular, there is an extra layer: who owns the structure? If you personally own the garden office, it is not automatically a company asset even if it is used for company work. If the company pays for building a structure on your property, you can wander into complex territory involving benefits, property law, and what happens if you sell the house. Many directors choose simpler arrangements, like the company paying a modest homeworking allowance and the director personally paying for the structure.

Equipment and furniture: often the easiest “big” claims

If your goal is to claim legitimate costs without turning your home into a tax minefield, focus on equipment. Desks, chairs, computers, monitors, printers, and dedicated office storage are generally more straightforward than building costs or large proportions of household overheads.

For self-employed people, equipment is typically claimed as capital allowances (rather than as day-to-day expenses), unless it is a low-cost item treated as consumable. For companies, equipment purchased by the company for business use is often cleanly deductible through the appropriate accounting and tax treatment, assuming private use is limited or properly addressed.

Either way, keep clear records, store receipts, and ensure the equipment is genuinely used for business. If an item is used partly personally (for example, a laptop used for streaming and gaming in the evenings), you may need to restrict the claim to the business portion, especially for sole traders.

How to calculate a reasonable business-use percentage

There is no single perfect method for everyone. A reasonable approach is one that matches how you actually use the space and is consistent with the nature of the cost. Here are three common models:

Model A: area-based only (simple, sometimes too generous)

You calculate office floor area as a percentage of total home floor area and apply that percentage to selected household costs. This can be simple, but it may overstate business use if the office is only used during working hours.

Model B: area x time (more realistic)

You calculate office area percentage, then multiply by the proportion of time the office is used for business. For example, if the office is 10% of total area and used 40 hours a week, you might compare that to total hours in a week to reduce the claim. This often produces a smaller but more defendable number.

Model C: actual usage for key costs (best evidence, more work)

For electricity, you estimate (or measure) office usage by looking at heater wattage, computer usage, lighting, and other devices. You claim that directly, rather than applying a household percentage. Then you use a simpler method for other costs (or claim only direct costs). This can be surprisingly effective for garden offices because office electricity use can be isolated and justified without claiming a share of everything else.

Record-keeping: what to keep and why

You do not need to drown in paperwork, but you should keep enough to support your approach if asked. Sensible records include:

Invoices and receipts for office-related spending: repairs, electricity work, broadband line, furniture, equipment.

A simple calculation note showing how you apportioned shared costs (area measurements, room count, and the time basis you used).

A usage log if your pattern is irregular. If you work in the garden office only part of the year, note that and adjust the claim accordingly.

Photos or a basic floor plan can be helpful, especially if the garden office is clearly set up as a workspace with business equipment and minimal personal use.

The aim is not to prove every minute, but to show you took a reasonable and consistent approach.

Exclusive business use and the potential tax sting when you sell

This is one of the most important “hidden” issues with home office claims. In many cases, selling your main home is largely covered by private residence relief, meaning you may not pay capital gains tax on the increase in value. But if part of your home is used exclusively for business, that part may not qualify for the same relief in the same way.

A garden office can be particularly sensitive if it is a clearly separate structure and you treat it as wholly business. The risk is not automatic doom, but it is a reason many advisers recommend keeping some element of personal use, even if small, and avoiding claiming a large proportion of fixed household costs that imply the space is exclusively business.

In plain terms: if you claim aggressively now, you could create a bigger tax bill later. Many people choose a conservative method (like simplified expenses or a modest apportionment of variable costs) to reduce that risk.

Business rates, council tax, and planning: when do they matter?

Most garden offices used by one person for administrative work are treated as part of domestic property rather than separate business premises. However, certain factors can trigger additional considerations:

Business rates: If the space is used like a separate business unit, has regular visits from clients, or is used for selling goods, it may increase the risk of being assessed for business rates. The likelihood depends on local authority practice and the facts.

Planning permission: Many garden rooms fall within permitted development rules, but using a building as a business space can sometimes alter the assessment, especially if it changes the character of the property or increases traffic and noise. This tends to matter more for customer-facing activities than for quiet desk work.

Council tax: Council tax is generally a household charge, but if a part of the property is treated as a separate unit or has a distinct business use, it can complicate things.

This article is focused on claiming expenses rather than property regulation, but it is worth being aware that “turning a shed into business premises” can mean different things to different authorities. For most home-based professionals, it remains straightforward. If you are running a customer-facing business from the garden, it is wise to check your position.

Limited companies: homeworking allowances and rent

If you run a limited company, the cleanest approach is often a homeworking allowance: the company pays you a modest amount to cover the additional household costs of working from home. This can be simple to administer and avoids messy property questions.

Some directors consider charging the company “rent” for the garden office. While this can be legitimate in some cases, it can also create complications:

Tax on the rent: You may need to declare rental income personally.

Mortgage lender and insurance issues: Formal renting arrangements can conflict with residential mortgage terms or insurance conditions in some situations.

Capital gains implications: Treating part of your home as rented business space may affect reliefs on sale.

That does not mean rent is always wrong; it means it should be approached carefully and usually only where the sums are significant and the arrangement is clearly documented and justified.

Example scenarios (to show how different approaches play out)

Scenario 1: freelance designer, modest garden office, mixed use

A freelance designer uses a garden office 4 days a week for client work and occasionally uses it on weekends for personal projects. They claim a modest portion of electricity and broadband based on a reasonable estimate, plus direct costs like a new office chair and a repair to the office door. They avoid claiming council tax or mortgage interest. This is conservative, simple, and less likely to create issues later.

Scenario 2: therapist with client visits in a garden room

A therapist sees clients in a garden room with a separate entrance and waiting area. The room is set up professionally and rarely used for personal purposes. The therapist claims a higher proportion of costs because the business use is substantial and clear. However, they also consider potential implications for business rates, insurance, and capital gains. In this scenario, the “property” angle matters more than in a desk-based role.

Scenario 3: limited company director working from garden office

A company director works from a garden office and the company pays a regular homeworking allowance. The director personally pays for the garden room build, and the company purchases the desk, computer, and monitors. This keeps ownership and property issues simple while still capturing meaningful business deductions.

Common mistakes to avoid

Claiming the whole build cost as an expense: The structure is usually capital expenditure, not a routine running cost.

Claiming large fixed-cost proportions without thinking ahead: Council tax, insurance, and mortgage interest apportionments can be contentious and can have future implications.

No clear basis for the percentage claimed: “I guessed 30%” is weaker than “office is 12m² out of 120m² and used about 40 hours per week.”

Ignoring private use: If you do use the space personally, acknowledge it and restrict the claim accordingly. Overstating exclusivity can backfire.

Mixing personal and business purchases without records: Keep invoices and note the business rationale, especially for items that could look dual-purpose.

Practical tips for keeping your claim defensible

Be consistent year to year: If you change method, note why (for example, you started using the office full-time or installed separate metering).

Keep it proportionate: A claim that wipes out most of your household bills is more likely to raise questions than a reasonable, measured claim.

Consider separate metering or smart plugs: For garden offices, measuring electricity use can provide strong evidence and may allow a claim that is accurate without apportioning everything else.

Separate business services where sensible: A dedicated business broadband line to the office can simplify claims, though you should weigh the cost against the benefit.

Use the simplest method that gives a fair result: Complexity is not a virtue. The “best” method is the one you can maintain and explain.

So, can you claim expenses for business use of your garden office or shed?

In many cases, yes: you can usually claim something if you use a garden office or shed for business, but what you can claim and how you claim it depends on your business structure and the nature of the costs.

For many self-employed people, either a simplified homeworking method or a modest actual-cost apportionment focused on variable costs (especially electricity and broadband) is a practical and low-stress solution. For limited company directors, a straightforward homeworking allowance combined with the company buying business equipment is often the cleanest approach.

The biggest traps tend to be around capital expenditure on the structure itself and the implications of exclusive business use when you sell your home. A garden office feels separate, but it is still connected to the wider tax picture of your property. When in doubt, keep the claim reasonable, document your approach, and focus on costs that clearly relate to business activity.

Checklist to apply right now

1) Decide your method: simplified expenses, actual apportionment, or a hybrid focused on direct costs.

2) List direct office costs you can clearly evidence (repairs, office broadband, security upgrades, consumables).

3) If using apportionment, measure the office area and write down typical weekly business hours.

4) Identify which household costs you will apportion and which you will leave out to keep things conservative.

5) Keep receipts and a short calculation note with your tax records.

6) If you operate through a limited company, consider whether a homeworking allowance and company-owned equipment is simpler than rent.

Taking these steps will help you claim what is reasonable without turning your garden office into a long-term tax headache.