Can you run a business from a residential property?
08/16/2021
With Covid-19 providing basis to the argument that working from home is the future, here we take a look at what is needed in order to run a business from home, what insurance may be needed, and a few things to consider when beginning that process.
As of 2020, just under half of the two million limited companies in the UK are not listed as ‘employers’ and therefore are ‘one-man-band’ businesses who will very likely be based from that person’s home. Of the other 990,000 that are employers, it is also likely that a large amount will have either begun from home or continue to be driven from home.
Can you run a business from home?
Do I need permission to run a business from home?
Whilst running a business from home can save time and money finding a suitable premise, there are a couple of things that need to be considered before progressing. Firstly, whilst it should be ok, it is worth checking with your mortgage provider if they need to give permission. Additionally, and depending on the size of the home, you may need planning permission if you will require a significant structural change to be made to the home, or if people will be coming and going in addition to any activities that wouldn’t be expected in a residential area.
Can I run a business from home if I rent?
If you are renting a property, you will need to get the landlords permission to run a business from home. This may or may not be specifically referred to in the tenancy agreement, but if it isn’t then you will need to get clarification before progressing.
Do I need insurance to run a business from home?
Does running a business from home impact home insurance?
The short answer is yes, there will be some impact on home insurance. However, how much depends on the scale to which your business is running. Areas such as contents insurance may need reviewing with more portable electronics being used, as well as motor insurance if any vehicle owned in the household is to be used for business use. Other potential areas to consider would be whether people will be visiting the home office and whether contents insurance covers taking any electronics to a café or during transport. It will be necessary to get in touch with your home insurance provider to run through what they need to know and how it may change your cover and premiums.
What to consider when running a business from home
Space
An obvious consideration and probably one of the first that any prospective new business owner will have is the space needed to run the business and whether the home is suitable for that. If the business doesn’t hold stock or products, then this may be less of an issue, but if a product is being sold then space will be needed to hold stock.
Equipment
As well as needing enough space for products, you will also need enough space for equipment. It’s easy to take for granted what equipment is needed, as an office takes care of that more often than not. Items such as computers, chairs, desks and chargers are obvious ones, but there may also be a need for printers, scanners and card machines.
Tax
There are certain tax allowances available to be claimed for when running a business from home, such as council tax, heating, phone calls, internet and electricity. You will also need to include business costs in your Self-Assessment tax return.
Licencing
Depending on the type of business you are running, you made need a license from your local council in order to operate.
Planning permission
Planning permission is needed in a few different scenarios, the most common of which is when making structural changes to your home in order to increase the space available – such as an extension for an office or garage for stock. As mentioned above, you may also need planning permission if your business increases activities that wouldn’t normally be expected from a residential area, such as regular visitors, deliveries or signposts.
Business rates
Business rates are payments made on the part of the property which is being used for your business – the valuation of which would need to be done properly by the Valuation Office Agency (VOA). You’d still have to pay council tax on the remainder of the property, but the areas used for the business may add an additional expense.
Safety
Health and safety is an area which is often taken for granted in more commercial office buildings, with it being commonplace for a person or group to have responsibilities for that. At home however that responsibility will fall onto the business and homeowner, so things such as safe access and exits, reviewing hazards and the risks and making anyone who comes on to the premises aware of these would be a requirement. In addition to this, ensuring smoke alarms are working properly is crucial, as is having either a fire blanket or fire extinguisher on hand.
