Video recording studio + Office space (and HMRC)

[tombbb]

Hey everyone,

I'm interested to see your opinion on the following situation:

• We have a small office space in town
• Since our business requires constant video recording (mainly for training customers how to use our products), we need a dedicated studio for this purpose, as our business office is not suitable for recording and post-production. We decided to use part of our home as a recording studio + editing suite in another room. Both rooms are used for personal things as well, therefore we only claim for appropriate m2.

Questions are:

• I assume HMRC wouldn't have an issue with claiming appropriate expenditure resulting from this video recording studio and editing suite in our house, since we don't have any other option at the moment (renting a larger office space in town would essentially cost 7-10x more than we claim now, plus ton of other issues such as additional broadband etc.). Or am I wrong and HMRC would complain that these are two completely separate buildings (office spaces) therefore only one is allowable. This would seem strange to me though, especially for things like video recording studio, which cannot be setup in any random office space, as, well, it requires some space
• Since we're only claiming by m2 and both rooms have also other use in our household, I assume there shouldn't be any capital gain tax liability. Correct?

Quick example:

• £1000/pm rent office (in town)
• £300/pm claimed for video recording + editing studio (based on true m2 calculations and fully documented, including calculations, photos etc. in case HMRC wants to investigate)

Thanks!

 

[Newchodge]

Who owns the equipment that is used by the company in the house

 

[tombbb]

All of them (camera, lenses, lights etc) are assets of the company

 

[STDFR33]

Is there a licence agreement in place between yourself and the company for use of the room?

The rental of the office will be tax deductible, along with running costs if in the company name.

 

[tombbb]

Yes there is

 

[STDFR33]

Yes there is

Then yes.

It's not up to HMRC how you run your business.

 

[TheCyclingProgrammer]

The rental of the office will be tax deductible, along with running costs if in the company name.

But presumably also taxable rental income for OP. They should cap any rental paid from their company to them for use of the space to whatever they can offset in tax deductible rental income costs (making the rental profits £nil).

 

[STDFR33]

But presumably also taxable rental income for OP. They should cap any rental paid from their company to them for use of the space to whatever they can offset in tax deductible rental income costs (making the rental profits £nil).

Indeed, but it's still allowable for the company even if there isn't sufficient allowable expenses to offset the rental income.

 

[TheCyclingProgrammer]

Indeed, but it's still allowable for the company even if there isn't sufficient allowable expenses to offset the rental income.

Sure, it might still be worth OP taking the personal tax hit for the sake of the business but its something they should take into consideration, especially if they are a higher rate taxpayer.