If you have spent the pandemic creating the ultimate home office, you are probably feeling pretty smug. That satisfaction might dissipate somewhat when you try to sell your house, however — and get whacked with a tax bill.
Accountants are warning white-collar workers they are taking a risk, because their new work space may be viewed by HM Revenue & Customs as a business premises, rather than a place of leisure.
Capital gains tax (CGT) is not levied on the sale of your main home, but it is applied to any part of your home used “exclusively for the purposes of a trade, business, profession or vocation”.
In practice, this means the surging number of Covid-19 “offices” that have sprung up all over the country as working parents desperately attempt to escape their children (or perhaps their spouses) could land home workers with an unexpected tax bill.
A row has broken out between Hotel Chocolat, the upmarket chocolatier, and Great Portland Estates, the London property company, souring hopes of a ceasefire between retailers and landlords.
Hotel Chocolat is locked in a stalemate with Great Portland Estates over its Regent Street store, where trading is 60 per cent below last year’s levels because tourists and office workers have stayed at home. The chocolatier, founded in 1993 and listed four years ago, has reached compromises with most of its other landlords.
The dispute is the latest in a series between retail companies and their landlords during the pandemic, which has forced store chains to demand rent reductions, waivers or a switch to rents linked with turnover to cushion them from the high street downturn. The value of property companies has tumbled in tandem with the issue, with Shaftesbury, another London landlord, last week tapping investors for £300 million.