We are building an Extension to the house for a dining room and home office . Could we put a percentage of this through the limited company ?
Straight answer: Yes, potentially – but with strict caveats. Let’s break it down:
1. Company Use Must Be Exclusive and Necessary
If your limited company (not you personally) is going to exclusively use part of the extension (e.g. the home office) for business purposes, then you might be able to put a portion of the costs through the company. BUT:
- It must be used solely for business – no personal use (not even checking emails while watching TV).
- The room/area must be clearly separated from personal/domestic space.
- It should be proportionate – you can’t chuck the whole extension cost through if only 10–15% is for the home office.
2. Capital Allowances & Tax Treatment
- Generally, you can’t claim capital allowances on the structure of the building (e.g. walls, roof, foundations).
- But you might claim capital allowances on:
- Fixtures and fittings (desks, lighting, cabling, etc.)
- Electrical systems, heating (if specific to the business area)
3. Corporation Tax & Capital Gains Tax Warning
If the company pays for any part of your property:
- That part of your home becomes a business asset.
- When you sell your house, that part may be subject to Capital Gains Tax (as it loses Private Residence Relief).
- Plus, it could raise issues with benefit-in-kind if the company pays for personal-use space (e.g. dining room).
4. Alternative: Claim Home Office Costs Personally
Rather than putting capital costs through the company, a more tax-efficient and simpler option may be:
- You personally pay for the extension.
- Then charge the company a rent/licence fee for using the home office space.
- This can be structured to cover a share of the building cost, heating, internet, etc.
- You’ll pay income tax on the rent, but you can deduct relevant costs.
- No CGT impact if structured carefully.
Things to Remember
- ✅ Claiming some fit-out or running costs is possible.
- ❌ Claiming structural build costs via the company for a mixed-use extension (dining room + home office) is risky and likely to trigger HMRC issues.
- 👌 Best route: pay personally, rent back to the company, or keep it simple and just claim allowable home working expenses.
Planning a home office upgrade? Let us help you figure out what your limited company can (and can’t) cover. Book a FREE consultation with us and get tailored advice!
