Are you one of those companies in need of an office fit out London, but have concerns over the affordability during the pandemic?
Covid-19 has put a lot pressure on businesses. Maintaining a healthy cashflow is the number one priority to ensuring your business is financially stable and viable for the months ahead.
However, the pandemic is forcing firms to make big changes to the way they work. That includes social distancing measures, as well as health and safety requirements.
For that reason, the office and commercial property landscape has shifted significantly since the pandemic hit in 2020.
Companies are on The Move
As a result of the pandemic, we are seeing an increasing number of companies in London downsizing. Working from home practices are reducing office staff numbers and larger workspaces in the capital are no longer required. In contrast, there are companies that are upscaling to accommodate social distancing demands.
This shift in the London commercial property market and increasing financial concerns, means businesses are on the hunt for an affordable London office fit out.
Affordable Office Fit Out London Options
The great news is there are a range of leasing options that allow you to keep the cash within your business and comfortably afford a great London-based office fit out company to complete the work.
There are tax savings to be had too; certain elements of your office fit out are tax allowable, which we will cover later in this article.
First let us introduce you to office fit out leasing.
Leasing Can Help with Cashflow, Budgeting and Forecasting
To lease an office fit out and the furniture means you can spread the cost over the term of you property lease. This is a particularly good option for businesses with a lower profit margin, such as sole traders, start-ups or SMEs.
There are many benefits to leasing your London office fit out, including:
- Maintain a healthy cashflow – no big outlay means you keep cash within your business to invest in other profitable revenue
- Fixed payments for accurate budgeting and forecasting
- Get the best solution now by spreading the cost, rather than being restricted by your current capital budget
- Payments are 100% tax allowable against your profits. In some cases leasing can even be cheaper than paying cash
- Match the lease of the workplace fitout to the lease on your building
- Leasing is quick to organise, usually within 2 to 3 days
How Does Office Fit Out Leasing Work?
With an office fit out lease, you can pay an affordable and fixed amount each month. There are two main options available:
- Lease Rental: set the amount you pay each month to match the terms of your lease. At the end of the lease term you can either upgrade the equipment, return it or negotiate ‘ownership’ for a small fee. Terms are available between three and five years and fixed payments help you pay for the equipment as you benefit from it.
- Lease Purchase: technically the only option at the end of the lease agreement is to return the assets or continue renting them at the same monthly amount. However the hirer can terminate the agreement at the end of the minimum term (with 30 days notice). After this point, they can offer a ‘lifetime rental’ for indefinite use. Such an agreement can be made at the outset to give you complete peace of mind.
A lease term is typically over a period of 3-5 years to fit the break clause on a property lease and can be used to finance your entire office fit out, including:
- Layout alterations
- Design and decoration
- Small building works
- Office partitioning
- Kitchens and tea points
- Washrooms, toilet cubicles and shower rooms
- Windows and doors
- Skirting and framework
- Air conditioning
- Heating and ventilation
- Water systems
- Lighting systems
- Acoustic panels
Step by Step Guide
Here are the basic steps to affording an office fit out London with a lease plan.
- Contact local office fit out companies and ask if they offer leasing. If you are in London, Kent, Surrey, Sussex or Essex be sure to contact us at JBH Refurbishments. We can definitely help!
- The office fit out company will put you in touch with their chosen lease provider. At JBH Refurbishments we work with Plus Finance. A reputable company that we have recommended many times
- The lease company will review your credit rating and discuss your options. This will give you a budget for the work.
- You will need to arrange a site visit with the office fit out company to discuss your requirements
- Your office fit out company will provide a quote for the work based on your budget. We can quote for a range of options to meet your requirements
- The office fit out company will supply the quote to the finance company
- Within 2-3 days your lease plan should be approved
- The office fit out company will provide a range of office interior design ideas for you to approve
- Planning and building approvals will need to be arranged. This will depend on the office fit out requirements. A straight forward office fit out may only require the approvals of the landlord
- The office fit out company will provide a schedule of works. The programme will explain each stage of your office fit out
- Work will commence onsite. At JBH, we employ our own team of project managers and trades to manage and complete the work according to the schedule. Having our own team, means they uphold our standards and work ethic throughout the process.
- Handover. The office fit out company will walk you through the work completed to ensure you are fully satisfied.
- Continue to pay the finance firm for your lease term. After this time you can opt to upgrade for a new affordable amount.
Leasing v Capital Allowance Expenditure
There are certain aspects of an office fit out that can be offset against your capital allowance. These are known as plant and machinery costs. In most cases their total cost can be deducted from your taxable profits using annual investment allowance (AIA). The current AIA allowance is £1,000,000.
Unfortunately, not every aspect of your office fit out can be claimed as plant and machinery. The walls, decor, doors, frames, windows and partitions walls are not included. However, items such as air conditioning, boiler systems, space and water heaters, fitted kitchens and washroom facilities can. Read the next section for the full list.
Before undertaking an office fit out in your London workplace, it is a good idea to check with your accountant to see where you can make some big savings when it reaches the end of your financial year. It could be worth paying for the tax allowable plant and machinery costs in full, while spreading the remaining refurbishment costs – i.e. decor, layout, carpets and furnishings – over the term of your property lease.
Alternatively, leasing your entire office fit out London could offer even better savings. That’s because lease rental payments are fully tax deductible, therefore you can avoid the whole capital allowance process. Instead, it becomes the lease funders responsibility to claim the allowances, meaning all you need to do is deduct the lease payments from your profits.
Current Capital Allowance for Plant and Machinery Costs
Here is a list of tax deductible Plant and Machinery costs that are typically associated with an office refurbishment:
- lifts, escalators and moving walkways
- space and water heating systems
- air-conditioning and air cooling systems
- hot and cold water systems (but not toilet and kitchen facilities)
- electrical systems, including lighting systems
- external solar shading
In addition to Plant and Machinery costs, you can claim for:
How JBH Refurbishments Can Help?
JBH Refurbishments is a reputable office fit out contractor in London. We have 20+ years in the business and continue to help a full range businesses maximise their office interior design potential.
If you have a London office fit out you need quoting, or you would like to find out more about leasing, please contact us on 0333 207 0339.