05: Premises and equipment

You want premises that enable you to operate effectively but without any unnecessary costs. You also need to consider the future – you don’t want to be tied to premises that might be unsuitable when your business grows. The main choices are:

• Working from home – suitable for a small office.
• Renting. This usually has minimum upfront costs and your rent is a tax-deductible expense.
• Buying outright or taking a long lease. There may be tax allowances, for example if you buy new industrial premises but these are to be phased out by 2010/11.

Tax relief for buying equipment is given by ‘capital allowances’, which normally spread the relief over several years. Sometimes enhanced capital allowances are available. The system of capital allowances is set to change from April 2008. You might want to take professional advice on the likely impact of the changes. You can also lease the equipment you need, which can be more tax-efficient. There are also many other issues to consider. You may be asked to give a personal guarantee if you are renting property or even leasing equipment.