CoWorking spaces have seen a huge surge in popularity in recent years. With the rise of remote working, and working from home not being feasible for everyone, they fulfil a useful purpose for freelancers and entrepreneurs. These shared work environments offer fundamentally, a space to work, but also a space to network, and an escape from the distractions of home.
Note: While this blog post provides general information on whether CoWorking spaces are tax deductible, tax laws and interpretations can be complex. Consulting with a qualified accountant will allow you to receive tailored guidance for your specific situation.
When Coworking Spaces Might Be Tax Deductible
The concept of deducting coworking space fees aligns with the existing tax treatment of home offices. If you run a business and dedicate a specific area of your home solely for work purposes, you can claim a portion of your rent or mortgage and utility bills as business expenses. Coworking spaces essentially become an extension of this concept. They provide a dedicated workspace outside of the home, allowing you to separate business and personal expenses.
Key Factors Influencing Deductibility
- Wholly and Exclusively for Business. The core principle of claiming business expenses is that they must be incurred wholly and exclusively for the purpose of generating business income.
- Proportionality of Expenses. Some coworking spaces offer membership packages with bundled in features such as refreshments. When claiming your CoWorking space fee as a deduction, you’ll need to be able to demonstrate the portion of the fee that relates solely to your dedicated workspace. You cannot typically expense meals, food, or drink.
If you do go ahead and use a CoWorking space for your business, it is crucial that you maintain thorough records of your invoices and receipts. Like with any business expense, HMRC might request these documents during tax audits.
Beyond Tax Deductions: The Value of Coworking Spaces
While tax deductibility is a valuable benefit, it shouldn’t be the sole factor when considering a coworking space. These shared work environments offer a number of additional benefits to freelancers and entrepreneurs:
- Professionalism. Compared to video calls from your home office, a dedicated workspace creates a professional image for client meetings and presentations.
- Networking Opportunities. Coworking spaces are often filled with entrepreneurs and freelancers. Being a part of this community can lead to valuable networking opportunities and collaborations.
- Increased Productivity. For many people, the separation of work and home life can significantly improve their focus and productivity. The simple process of commuting can enable people to switch on and off from work mode, and perform better whilst working.
CoWorking spaces can be a highly valuable asset for freelancers and entrepreneurs. They offer a space to work and network and ultimately help to provide a better work life balance. If you are looking for a CoWorking space in London, Bristol, Birmingham or Manchester, Love Mondays Office Space are here to help! We’ll help you discover a place where you’ll love to work and do all of the legwork for you, just get in touch to get started!
