Business Storage: Are Storage Units Tax Deductible?

Self storage is often one of the last things people want to spend money on, but it can be a crucial expense for many businesses. So if you’ve ever wondered, “Can you write off a storage unit on taxes?” the answer is yes! There is, however, one crucial question you need to ask yourself: Is it being used for business purposes?

Whether you’re storing inventory, archiving documents or temporarily housing office furniture and equipment during a move, knowing how to claim these expenses effectively can make a considerable difference to your bottom line.

In this post, we’ll explore the ins and outs of claiming storage unit fees as a tax-deductible expense in the UK. From understanding the basics of tax deductions to offering practical tips on maximising your tax savings, we’ll give you all the information you need.

Understanding Tax Deductibility for Storage Units

A tax deduction means you can subtract certain expenses from your total taxable income, reducing the amount of tax you need to pay. For business owners, this includes the various costs that come with running a business, such as renting storage units. In the UK, the cost of renting a storage unit is tax deductible, provided it’s being used for legitimate business purposes.

Business Use Only

The key thing to remember is that your storage unit bill is only tax deductible if the unit is used strictly for business. If you’re using it for personal stuff or mixing business and personal items, it won’t qualify for tax deductions.

Some of the common reasons that businesses need to rent storage units include:

• Storing Inventory: If your business sells physical products, it’s reasonable to expect that you might need extra space for your stock. If you do, that makes your storage unit a necessary business expense and the cost is tax deductible.
• Archiving Documents: Some businesses generate a lot of paperwork that needs to be stored securely. A storage unit used for archiving business documents can be claimed as a tax-deductible expense.
• Temporary Storage During Office Moves: If your business is moving to a new location and needs temporary storage for office equipment, furniture and supplies, the cost of the storage unit can be deducted from your tax bill.

How to Claim Storage Unit Expenses on Taxes

Claiming storage unit expenses on your taxes is an essential part of managing your business finances effectively. By following a few key steps, you can ensure that these costs are accurately reflected in your tax returns, helping you to maximise your deductions and reduce your tax bill.

1. Keep Accurate Records and Receipts

To claim storage unit expenses on your taxes, it’s important to keep an accurate record of bills, receipts and any contracts or agreements related to renting the storage unit. These documents will help back up your claim if the tax man comes knocking. So, make sure you keep:

• Receipts: Hold on to all your receipts for payments made to the storage facility.
• Contracts & Agreements: Keep copies of any rental agreements or contracts related to the storage unit.
• Expense Logs: Document the reason for using the storage unit and ensure it aligns with business purposes.

2. Ensure the Storage Unit is Business-Only

As tempting as it may be to use the storage space while you’re moving home, decorating, or simply as a place to keep your golf clubs, your storage unit has to be used solely for business purposes for it to qualify as tax-deductible.

It’s also worth keeping a clear inventory of the business items stored such as stock, equipment and documents. Not only is this one of the best ways to organise your storage unit, but it’s also a good way to keep track of items that match the business-only criteria.

3. Consult a Tax Professional

Tax laws can be complex and it’s always a good idea to seek professional advice from your accountant or tax advisor if there’s anything you’re unsure of.

A tax professional can provide specific advice tailored to your business situation, help you understand the latest tax laws and regulations to ensure your business is compliant and identify other potential deductions you might have missed. For example, if you had to hire a removal company to help with the office move, that might also be a tax-deductible expense…

Tips for Maximising Tax Deductions on Storage Units

Maximising your tax deductions on storage units can make a big difference to your business’s bottom line. Here are some practical tips to help you get the most out of your deductions:

Combine Storage Expenses with Other Deductible Moving Expenses

If your business is relocating, you can often combine storage expenses with other deductible moving costs. This includes expenses like hiring a moving company, renting vans and the temporary storage costs for office equipment and furniture. By grouping these costs together, you can ensure that you’re claiming the maximum allowable deductions.

Use Storage Units Strategically to Support Business Operations

Storage units aren’t just for storing excess inventory or documents. They can also be used strategically to support various business operations, such as:

• Seasonal Storage: If your business has seasonal inventory, using a storage unit can help manage stock levels throughout the year. This keeps your main business premises free of clutter and ensures you have products ready for peak sale seasons.
• Bulk Purchasing: Buying supplies or products in bulk can often save money and a storage unit provides the extra space needed to take advantage of bulk purchasing discounts, while also ensuring the expenses are tax deductible.
• Archiving: Instead of renting expensive office space just to store old records and documents, a storage unit can act as an affordable archiving solution. This frees up valuable office space for productive use and still qualifies for tax deductions.

By combining storage expenses with other deductible operational costs, using storage units strategically can help you maximise your tax deductions and improve your business’s finances — ensuring you’re not leaving any potential savings on the table.

FAQs

Can you claim a storage unit on taxes in the UK?

Yes, you can claim a storage unit on taxes in the UK, provided it’s used exclusively for business purposes, such as storing inventory, equipment and business documents.

Is storage VAT-exempt?

No, storage services are not VAT-exempt in the UK. You will need to pay VAT on storage unit rentals, but if your business is VAT registered, you may be able to reclaim this VAT as part of your business expenses. Always check with a tax professional to ensure compliance with VAT regulations.