There are many advantages to running a business from home, including lower overheads and greater flexibility. It can provide you with a better work/life balance and can also be a great way to test out a new business idea.
But can you run a business from a local authority-owned or rented accommodation? The answer to this question is yes, as long as you get permission from your landlord and local authorities.
In this article, we will cover the steps you need to start a business from home including what arrangements you will need to make with your landlord and the relevant authorities. We will also explain the tax and insurance considerations you need to be aware of to ensure your business is compliant.
Get Permission from Your Landlord
The first step is to speak to your landlord and check your tenancy agreement. You will need to get written permission from them to run a business from the property.
If you are a council tenant, you can apply for ‘permission to sublet’ which will allow you to sublet part of your property or the whole property if you wish. If you are renting from a private landlord, they may be more flexible and allow you to run a business from your property without needing to sublet.
It is important to check with your landlord as some tenancy agreements will not allow businesses to be run from the property. If this is the case, you may need to look for alternative accommodation or try to renegotiate the terms of your agreement.
Decide Who Will Pay Relevant Taxes and Additional Bills
The next step is to decide who will be responsible for paying any additional taxes or bills that are incurred as a result of running a business from the property. This is something you will need to discuss with your landlord as they may be willing to pay a portion of these costs. If they are not, you will need to factor these costs into your business budget.
If you are running a business from home, you may also be eligible for certain tax allowances which can offset some of the costs associated with running a business. For example, if you use part of your property as an office, you may be able to claim a proportion of your mortgage interest or rent as a business expense.
Tax allowances you may be eligible for include:
• Capital allowances – if you have bought equipment or machinery for your business, you may be able to claim a proportion of the cost against your tax bill.
• Business rates relief – if you are running a business from home, you may be eligible for reduced business rates.
• Small business rate relief – if your property has a rateable value of less than £12,000, you may be eligible for 100% relief on your business rates.
Get Permission from Local Authorities
Depending on the type of business you are running, you may also need to get permission from the local authority or housing commission. This is usually only required for businesses that are considered to be high risk or have the potential to cause a nuisance to neighbours such as businesses that involve the storage of large quantities of stock or the use of heavy machinery.
When applying for permission, you will need to provide a business plan and details of any measures you have put in place to minimise the impact on your neighbours. The local authority will also want to be satisfied that your business is compliant with all relevant planning and building regulations.
What to Include in the Application Form
When completing the application form, you will need to provide detailed information about your business including:
- The type of business you are running
- The products or services you offer
- The hours of operation
- The number of employees
- Whether you hold any relevant licences or permissions
You will also need to provide your contact details and the address of the property where the business will be based. This is so the local authority can contact you if they have any queries about your application.
Factors that Your Local Authorities Will Consider
When considering your application, the local authority will take into account the type of business you are running and its impact on the surrounding area. They will also consider whether there are any planning restrictions in place that would prevent you from running your business from the property.
Some factors that might result in an unsuccessful application include:
- The business causing a nuisance to neighbours such as excessive noise or smells
- The business generating a large amount of traffic
- The business being located in a conservation area or listed building
Business Rates Considerations
If you are running a business from a commercial property, you will be liable for business rates. These are a tax that is payable on the use of commercial properties and are calculated based on the value of the property.
You may also be required to pay business rates if you are running a home-based business that has been granted permission by the local authority. In this case, the number of business rates you will be required to pay will depend on the value of your property.
If you are unsure whether you are liable for business rates, you can contact your local authority or the Valuation Office Agency. Generally speaking, you will only need to pay business rates if your property has a rateable value of over £12,000 because this is the point at which businesses start to become eligible for relief.
Obtain the Relevant Home-Based Insurance
If you are running a business from home, you will need to make sure you have the right insurance in place. This will depend on the type of business you are planning to run and your likely interaction with the public but may include:
• Public liability insurance – This covers you for any damage or injury that your business causes to members of the public. For example, if a customer slips and falls on your premises or their possessions are damaged while in your care.
• Product liability insurance – This covers you for any damage or injury that is caused by a product that you have manufactured or sold. This may include food products, cosmetics, electrical goods, or any other type of product that you sell or supply to customers.
• Professional indemnity insurance – This covers you for any damages that are awarded against you as a result of professional negligence. For example, if you give advice to a client that leads to them losing money.
• Building and contents insurance – This covers the cost of repairing or replacing your property and possessions if they are damaged or destroyed by fire, flood, or other unforeseen events.
Other Insurance Considerations
In addition to the above, you may also need to take out specific types of insurance depending on the nature of your business. For example, if you run a childcare business you will need to have childcare insurance in place. Similarly, if you run a business that involves working with vulnerable people, you may need to have DBS insurance.
Home-based businesses are not automatically covered by standard home insurance policies so it is important that you check with your insurer to see what cover they can provide. You may need to take out a separate policy or add an extension to your existing policy.
When taking out home-based business insurance, it is important to disclose all relevant information about your business to your insurer. For example, if you have employees working for you or if you have customers visiting your premises. Failure to do so could invalidate your policy and leave you uninsured.
Choose Your Business Structure
There are a number of different business structures that you can choose from when setting up your business. The most common are sole traders, partnerships, and limited companies.
- Sole traders are the simplest business structure and are relatively easy to set up. You will be the sole owner of the business and will be solely responsible for its debts and liabilities.
- Partnerships are similar to sole traders but involve two or more people working together. Each partner will be jointly liable for the debts and liabilities of the business.
- Limited companies are a more complex business structure and are typically used by larger businesses. A limited company is a separate legal entity from its shareholders and directors. This means that the shareholders are not liable for the debts of the company.
When choosing a business structure, you should consider factors such as liability, tax, and administration. The most appropriate structure for your business will depend on its size and nature.
Register Your Business
Once you have chosen your business structure, you will need to register it with Companies House. This is a legal requirement for all businesses operating in the UK.
When registering your business, you will need to provide a range of information including the name and registered address of the company, the names and addresses of the directors, and details of the company’s share capital.
You will also need to appoint a company secretary and register for corporation tax. Once your business is registered, you will be issued with a certificate of incorporation. This document is proof that your company exists and is legally allowed to operate in the UK.
Apply for Business Licenses and Permits
Depending on the type of business you are running, you may need to apply for a license or permit from your local authority. For example, if you are running a food business, you will need to have a food hygiene certificate. Similarly, if you are running a taxi business, you will need to have a taxi license.
Before applying for any licenses or permits, you should check with your local authority to see what is required. Each authority has different requirements and it is important that you comply with them. Failure to obtain the necessary licenses and permits could result in your business being shut down and you being forced to pay fines.
Pay Taxes through Self Assessment
All businesses in the UK are required to pay taxes. The amount of tax you will need to pay will depend on a number of factors such as your business structure, your profits, and whether you are VAT registered.
If you are self-employed, you will need to complete a Self Assessment tax return every year. This is used to calculate how much tax you owe. You will also need to pay National Insurance contributions if you are an employee of your own business.
If your business is registered for VAT, you will need to charge VAT on all goods and services that you sell. You will then need to submit a quarterly VAT return to HMRC.
It is important that you keep on top of your tax obligations. Failure to pay the correct amount of tax could result in you being fined or even jailed so make sure you stay on the right side of the law.
The Pros and Cons of Running a Business from Home
There are a number of advantages and disadvantages to running a business from home. Some of the main advantages include:
- You can save money on office rental costs
- You have more flexibility over your working hours
- You can avoid commuting costs
However, there are also some disadvantages to consider such as:
- You may find it difficult to separate your work and home life
- You may need to make some changes to your home to accommodate your business
- Your business may be limited by the size of your property
As you can see, the answer to the question whether you can you run a business from a council property or rented accommodation is yes, as long as you get permission from your landlord and local authorities. If you are thinking of starting a business from home, it is important to weigh up the pros and cons before making a decision. Make sure you are up to speed with everything it involves and you should be able to get your business up and running in no time.