How to Claim Office Furniture on Tax

During the pandemic, HMRC became overwhelmed with claims for tax relief on items such as office furniture, office supplies, computer equipment and stationery as more people worked from home.

With this change in working habits and an uplift in the purchase of office furniture, desks, and supplies, it’s important to understand your options for possibly deducting office furniture from your taxes. Whether you are a small business owner or an individual there will be some form of a tax break for working from home.

Throughout this guide we will explain how to claim office furniture on tax from both a business and personal perspective. If you operate a business and work from both home and a work office, this guide will cover how to claim office equipment and furniture on tax in both circumstances.

If you’re just here for the quick and simple getaway though, here’s an overview:

You can claim office furniture on tax as a limited company or sole trader, as you may qualify for capital allowances on office equipment which reduces taxable profit. You can report these allowances on a self-assessment or corporation tax return. Individuals may be able to claim for working-from-home expenses or tax relief on job expenses.

As with any tax related matter, there’s more to it than that though. For a full understanding of the intricacies of claim office furniture on a self-assessment or company tax return, it’s all below. 

Can you claim tax on office furniture?

There are two different situations when considering claiming tax on office furniture. Scenario one is whether you can you claim tax on office furniture if you run a business or trade, and two whether you can you claim tax on office furniture as an individual working from home.

These are two different situations, and you will probably wish to know the answer to both as you may have been missing out on some tax relief.

Can you claim tax on office furniture as a business?

In most cases, you can claim tax relief on the full cost of office furniture provided it is wholly and exclusively for the use of the business and there is no significant private use.

If you have a limited company, you can claim tax on office furniture because it qualifies for a type of capital allowance called annual investment allowance. 

Applying capital allowances against the purchase cost of the furniture reduces your taxable profit for calculating corporation tax is reduced by the capital allowances claimed on office furniture.

Claiming tax on office furniture as a business will happen through your corporation tax return submitted to HMRC.

Example

Marc’s company has a trading profit for corporation tax of £10,000. During the year Marc’s company purchased £2,000 of new office furniture. If Marc chooses to use his annual investment allowance that would reduce the company’s taxable profit to £8,000.

Please consult with your accountant when deciding whether to use your annual investment allowance or claim writing down allowances may be more beneficial.

Can you claim tax on office furniture as an individual?

In most cases you can claim tax relief on the full cost of substantial equipment, for example, a computer, you must buy to do your work.

You can only claim tax relief for equipment expenses if:

• you need it to do your job
• you use the equipment for work and there’s no significant private use – this includes using the equipment according to your organisation’s policy

If your employer gives you money for the item reduce the amount you claim tax relief on by the amount of money your employer gives you.

Can I claim office furniture on a self-assessment?

Yes, you can claim office furniture through a self-assessment tax return. An investment in the tools and plant you need to carry out your work such as office furniture can qualify for tax relief. 

The tax relief available for claiming office furniture through self-assessment is called capital allowances. These may take the form of annual investment allowance or writing down allowance.

You may wish to discuss this with your accountant to work out which one is right for your circumstances when claiming office furniture on self-assessment.

The amount of capital allowances calculated will reduce your trading profit on which you pay tax.

If the amount of office furniture purchased is relatively small, then it might make sense to charge it all to the profit and loss account and not capitalise it as an asset. 

This is simpler for most small businesses and avoids the need to calculate depreciation and capital allowances.

How to claim the working-from-home tax relief?

You may be able to claim tax relief for additional household costs if you must work at home for all or part of the week.

If you previously claimed tax relief when you worked from home because of the coronavirus (COVID-19), you might no longer be eligible.

You can claim tax relief if you must work from home, for example, because:

• your job requires you to live far away from your office
• your employer does not have an office

You cannot claim tax relief if you choose to work from home. This includes if:

• your employment contract lets you work from home some or all the time
• you work from home because of COVID-19
• your employer has an office, but you cannot go there sometimes because it’s full

You can only claim for things to do with your work, such as:

• business phone calls
• gas and electricity for your work area

You cannot claim for things that you use for both private and business use, such as rent or broadband access.

You can either claim tax relief on:

• £6 a week from 6 April 2020 (for previous tax years the rate is £4 a week) – you will not need to keep evidence of your extra costs
• the exact amount of extra costs you’ve incurred above the weekly amount – you’ll need evidence such as receipts, bills or contracts

You’ll get tax relief based on the rate at which you pay tax.

Example

If you pay the 20% basic rate of tax and claim tax relief on £6 a week, you will get £1.20 per week in tax relief (20% of £6). This would equate to £57.60 for a full year (based on a 48-week year).

If you pay the 40% higher rate of tax and claim tax relief on £6 a week, you will get £2.40 per week in tax relief (40% of £6). This would equate to £115.20 for a full year (based on a 48-week year).

You’ll usually get tax relief through a change to your tax code.

Head over to the HMRC tax relief for employees site to check your eligibility and to make a claim. 

FAQs on office furniture and tax deductions

What office furniture can you claim on tax?

The type of office furniture you can claim on tax include the obvious items that are needed to facilitate your work. That includes desks, chairs, and storage solutions.

Is office furniture tax deductible?

Yes. Office furniture is tax-deductible provided it is required to perform your business activities and there is minimal personal use.

For individuals, you can claim working-from-home tax relief as well as tax relief for your job expenses.

For limited companies, you can claim tax relief via a reduction in your corporation tax bill.

For sole traders and partnerships, you can claim tax relief through your self-assessment tax return by reducing your taxable profits from your trade.

In both business cases, you may choose to capitalise the office furniture as an asset and claim capital allowances or for small purchases post them to the profit and loss account and claim full costs in the first year. You may be able to claim full-year costs through capital allowances so it is a question of how you would like to present your accounts. A discussion point to have with your accountant.

How much can I claim for tools self-employed?

In most cases, you can claim tax relief on the full cost of substantial equipment, for example, tools for the self-employed, which you must buy to do your work. This is because it qualifies for a type of capital allowance called annual investment allowance.

You can claim AIA on most plant and machinery up to the AIA amount.

The AIA amount has temporarily increased to £1 million between 1 January 2019 and 31 March 2023.

Adjust your AIA if your accounting period is more or less than 12 months.

For example

If your accounting period is 9 months, the AIA will be 9/12 x £200,000 = £150,000.

You may also need to adjust the amount you claim if the AIA changed in that time.

For details on changes to the AIA please visit the HMRC annual investment allowance documentation. 

Conclusion

Who would have thought that such a dry subject as buying office furniture would have so many rules and considerations? You may never look at a trip to IKEA in the same way again now you know there are potential tax savings to be had.

Unless you are spending substantial sums of money kitting out a new office then the question of whether you can claim tax relief on office furniture and whether you should claim the annual investment allowance is a relatively simple one – claim tax relief on office furniture as soon as possible and get some of your money back.

It takes a bit more care and consideration when you are spending larger sums especially if short-term cash is not the major consideration. As corporation tax rates are going to increase to 25% from 19% in the future would it be better for you to claim minimal capital allowances now, so you have more to offset later at a higher rate?

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