Are you legal?
Many small businesses are run from home, particularly when they are getting started. It is important to note however, that when running a business from a residential premises which is your primary home, there are a number of factors which must be considered.
1. Restrictive Covenants
The first thing to consider, is whether there are any restrictive covenants prohibiting certain use of the premises, for example not to use the land for any business activity. The title to the property should have details of any restrictions and you should check this before you start to run your business.
2. Permissions
To run a business from your home, permission may be needed from:
- Your mortgage provider (if applicable), as some lenders prohibit the use of property for business unless consent is obtained;
- The local planning office, if you plan to make major alterations to the property; and
- The local council, if you are going to have lots of customers or deliveries, want to advertise outside the property or if a licence is required to run the business. Certain types of business require a licence to be obtained. To check if you require a licence please use the licence finder tool on the Gov.uk website.
You do not necessarily need planning permission to run a business from your home, however, it will be necessary if any of the following apply:
- The property will no longer be used mainly as a private residence;
- The business will result in a marked rise in traffic or people attending the property;
- The business will involve activities that are unusual in a residential area; or
- The business will disturb the neighbours at unreasonable hours or create other forms of nuisance such as noise or smells.
It is always advisable to check with the local planning office before you start running a business from your home.
3. Building regulations
If the proposed use of the property involves work which will affect the structure of the building, the means of escape and other fire precautions, or affect the access to and use of buildings, Building Regulations must be complied with as the work will be regarded as a ‘material alteration’.
4. Buildings and contents insurance
Some insurance policies prohibit business use and therefore you would need to inspect and update your policy as required. Additionally, depending on the nature of the business, employers and/or public liability insurance may need to be considered, to deal with employees or third parties.
5. Tax allowances
The business costs can be included in your Self Assessment tax return if you are a sole trader or part of a business partnership.
You can claim a proportion of the cost of things like council tax, heating, lighting, phone calls and broadband. You can use a flat rate to calculate your simplified allowable expenses.
You may need to pay Capital Gains Tax on the part of your property used for your business if you sell your home.
6. Business rates
Businesses are liable for business rates rather than council tax. If you work from home, depending on the level of use, the part of the property used for the business may be liable for business rates while the remainder of the property remains liable to council tax.
7. Health and safety
You will need to manage health and safety as with any other business.
If you currently run your business from your home or are considering doing so, and you require further assistance, please speak with a member of our Commercial Property Team, via [email protected] or call us on 01733 882800.
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