20 May 2025

If you regularly use coworking spaces, you might wonder ‘is coworking space tax deductible?’ Find out the answer and how to claim in this informative guide.

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Are Coworking Spaces Tax Deductible?

If you regularly use and pay for coworking spaces, you might have started to wonder, ‘is coworking space tax deductible?’ Coworking offers plenty of flexibility and creativity for professionals, so understanding the tax implications is important if you find yourself using these environments often. This guide will explain whether coworking spaces are tax deductible, the conditions and exclusions involved, the process of making a claim, and practical tips for managing tax deductions.

Are coworking spaces tax deductible?

Good news: for UK business owners and remote workers, coworking space costs can often be classified as business expenses. Use of a coworking space is typically tax-deductible if it is solely for business purposes. This includes your coworking membership fees, office furniture, and any additional costs, such as internet and utilities. Here's how it works:

1. Coworking space membership - Generally tax-deductible if you use it exclusively for business. You can’t claim if using the space for leisure purposes; for example, if you’re accessing the Wi-Fi for non-business activities
2. Office furniture - As a business owner, you could claim this as an expense if the furniture is for your business
3. Travel costs - These are deductible if you travel specifically for business to the coworking space

You should, of course, seek advice from a tax advisor to ensure compliance with tax laws and make the most of available tax reliefs. This ensures you're aware of any tax implications or potential benefits.

Colony Flint Glass Works - Private Office

Who can claim a coworking space tax deduction?

In the UK, both sole traders and limited companies can claim for a coworking space tax deduction. These deductions only apply when using the space for business purposes, and the conditions differ slightly between sole traders and limited companies. Each group must comply with specific tax rules to benefit from these deductions.

Sole traders

Sole traders can claim for coworking space expenses, as long as they are incurred "wholly and exclusively" for the business. This essentially means, any expenses being claimed must only be in relation to business activities.

Maintaining accurate records of these transactions, such as invoices and receipts, will make claiming easier. Travel costs to and from a coworking space are also deductible if the travel is necessary for the primary operation of the business.

As a sole trader, it's essential to understand which costs are allowable. You will not be able to claim a flat rate (a singular set rate of tax relief), as this is for home-based work and does not typically apply to coworking spaces.

Limited companies

Limited companies can also benefit from tax deductions on coworking space costs, providing that these expenses are necessary for business operations. All costs must be recorded accurately, with supporting documentation, to meet compliance standards set by HMRC.

As well as expenses for coworking memberships, office furniture, and utility charges, travel costs are another area where limited companies can gain tax advantages. If employees travel to a coworking space for business activities, these expenses can be deducted. It’s crucial that the travel is classed as essential and reasonable.

Unlike sole traders, limited companies might require more in-depth recordkeeping for effective audits and timely reimbursement.

Who cannot claim a coworking space tax deduction?

If you are not a sole trader or a limited company, then it is unlikely you’ll be able to make any claims for coworking space tax deduction. Here is a detailed breakdown of who cannot commonly make a claim for such expenses:

Employees

Individuals who work for a company and receive a salary or wages are not usually eligible to claim coworking space tax deductions. Even if an employee works remotely from a coworking space, they still cannot claim this as a tax deduction, as it is considered a personal rather than a business expense.

If an employer covers the cost of a coworking space for their employees, the deduction would be applicable to the business, provided it's an allowable business expense.

Part-time freelancers

Freelancers who have not yet established or registered a business cannot typically claim coworking space expenses as a tax deduction. This applies mostly to individuals who earn a minor supplementary income through freelancing without officially registering as self-employed, as the expense needs to be directly related to running a business.

Personal activities

If the coworking space is used for non-business-related activities, such as personal study or hobbies, any costs associated with these activities cannot be claimed as a tax deduction.

What can you claim for when using a coworking space?

As a sole trader or limited company, these are some of the items you may be able to make a claim for. Some are specific to coworking space tax deduction, and some are associated costs with running a business that uses a coworking space:

• Membership fees - You can claim the cost of your coworking space membership or subscription fees as a business expense

• Internet and utilities - Many coworking spaces, like Colony, include these costs in their fees, but if there are any additional charges for internet usage or utilities, these can be claimed, as long as they are essential for your business

• Office supplies - Items like paper, pens, and other office supplies purchased specifically for use at the coworking space can be deducted

• Printing - Costs related to printing and photocopying can be included in your tax deduction

• Meeting room hire - If you rent a meeting room within the coworking space for business meetings, these costs can be claimed

• Travel expenses - If you travel to your coworking space, costs like public transport fares or car mileage can be tax deductible, provided the travel is solely for business reasons

• Professional services - You can claim for costs associated with hiring professional services offered by the coworking space, such as legal or consulting services

• Business equipment - The cost of equipment rented from the coworking space, like projectors or AV equipment for presentations, can be deducted

• Workshops and networking - Fees for attending business-related events, seminars, or training sessions held at the coworking space may be deductible

• Catering and refreshments - Costs for catering services or refreshments purchased for client meetings held in the coworking space can also be claimed as business expenses

Colony Spring Gardens - Private Office

Coworking vs. home working tax implications

Coworking spaces and home offices can have different tax implications. In the UK, if you rent a coworking space, you can usually claim it as an office expense. However, you typically can't claim a home office deduction for the same business activities also conducted at a coworking space.

But there are exceptions to the rule. If you use a coworking space during the day, but still work from a home office at night, the situation can get complex. It's advisable to consult with a tax professional to understand potential tax reliefs.

While coworking memberships can bring additional costs, they also provide multiple benefits like a dedicated desk, meeting rooms, and all the facilities that come with a serviced office. So, it’s worth knowing how to make a coworking space tax deduction claim.

How to claim a coworking space tax deduction

Follow these basic guidelines to get started with a claim for coworking space expenses:

1. Gather receipts and invoices - Collect all receipts and invoices for your coworking memberships any any coworking costs, including any additional costs for office furniture or dedicated desks
2. Determine business use - Ensure that the coworking expenses were incurred “wholly and exclusively” for business purposes. For sole traders, a portion may be deductible if used partly for personal purposes
3. Maintain accurate records - Keep detailed records of all expenses related to coworking spaces. This may include travel costs to and from the coworking space for business meetings
4. Calculate the deduction - Subtract personal use costs from total expenses to determine the business expense deduction. This deduction can then reduce your taxable profits
5. Report on tax return - On your self-assessment tax return, list your coworking expenses under business expenses

Tips for managing coworking space tax deduction

Tax is complex and time-consuming, but a necessary evil. Finding ways to make it as pain-free as possible will help you to feel better prepared at the end of the financial year. Here are a few tips to make claiming for your coworking space tax deduction a little easier:

• Understand expenses - Know exactly what you can and can’t claim for, and ensure that everything you do claim for is strictly for business purposes
• Keep detailed records - Keeping detailed, accurate and complete records of all expenses, including invoices and receipts, will speed up the process
• Separate personal and business use - If you use the coworking space for non-business activities, only claim the portion used for business purposes activities
• Flat rate claims - Consider claiming a flat rate for certain office expenses as per HMRC guidelines to simplify the process
• Separate accounts - Use a dedicated business bank account for coworking payments
• Use an expert - Consider consulting a tax advisor to maximise deductions legally

Coworking With Colony

If you're ready to make the move into a coworking space, Colony is a network of stunning serviced offices and coworking spaces based across Manchester. Alongside private offices, we also have dedicated desks, hot desking spaces and day pass options all available, with a range of memberships and fees. All rates and utilities are included in your fees, and with accessible city centre locations, you can easily get to us and enjoy working in the vibrant surroundings of Manchester city centre.

Not only that, but we also have meeting and event spaces to hire, a state-of-the-art podcast studio and beautiful roof terraces all available for your business needs. Our dedicated community teams are on hand at all of our locations to support you with everything you need to make your working day productive, inspiring and enjoyable.

Talk to Colony now about our coworking experiences and how you can make the move to a Colony serviced office.