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Can You Run A Business From A Local Authority-Owned Or Rented Property?

Yes, you can run a business from a local-authority owned or rented property as long as you have the necessary permissions to do so.

Working from home in an admin type capacity is generally ok and doesn’t generally require official permission, but anything that would require people to visit your home for business, or if the type of work you do needs licensing or specialist equipment to complete, permission should be sought.

To check your permissions or to get permission to work from your home follow these simple steps: 

  • Get written permission from your landlord to run a business from the property.
  • Obtain permission from local authority. You may need to submit a business plan, details of the operations intended and prove compliance with relevant regulations.
  • Ensure that you’re aware of any taxes/bills/business rates that will be required to be paid as a result of operating a business at home.
  • Ensure you have the correct insurance cover – public liability, product liability, professional indemnity, and buildings/contents insurance.
  • Choose the right business structure and register the business
  • Apply for any licences or permits needed for the type of business you plan to operate.

Running a business from home can be a great way to save costs on premises but this must only be done if it’s safe and legal to do so and once all proper procedures and permissions are followed.

Read on for more information on the key steps to follow when determining if you can run a business from a local authority owned property.

Get Permission from Your Landlord

The first step to running a business on a rented property is seeking the permission of the landlord. You must talk to the owner of the landed property or check the terms stated in the tenancy agreement. An acceptable permission format is a written document that gives you the right to do business there.

For council tenants, the procedure is applying for “permission to sublet” that grants you access to sublet a part of the property or the whole infrastructure. In some cases, the process is slightly different for those renting from a private landlord. Private property owners have the liberty to be flexible and allow you access to run a business on their property without requiring a formal application to sublet.

What is important is to always check tenancy agreements and speak to the landlord of that property. If they do not allow running a business on their property, you will have to get an alternative accommodation or attempt to renegotiate the initial agreement terms.

Decide Who Will Pay Relevant Taxes and Additional Bills

Deciding to run a business on a local authority-owned or rented property usually attracts additional taxes or bills. The question of who takes responsibility for those extra costs is worth discussing with the landlord. There are instances where the owner of the property agrees to foot a portion of the added taxes or costs. Some other landlords simply do not care and they expect you to factor the extra costs to your business budget.

Consider talking to a professional accountant for the best approach to these costs. There are instances where running a business from home makes you eligible for certain tax allowances that can offset some operational costs. An example is the eligibility to claim a proportion of your mortgage interest or rent as a business expense when you use a part of your property as an office.

The tax allowances you might become eligible for include:

  • Capital allowances – you might be able to claim a proportion of equipment or machinery cost for business against your tax bill.
  • Business rates relief – running a business from home or rented property can grant eligibility to apply for reduced business rates.
  • Small business rate relief – you might become eligible for a 100% relief on your business if your property has a rateable value below £12,000.

Get Permission from Local Authorities

For some prospective business owners, you might need to obtain permission from the local authorities in addition to speaking with your landlord. It is a requirement for businesses considered to be high risk or have the potential to cause a nuisance to neighbours. Examples include possible noise or environmental pollution from businesses that would involve the use of heavy machinery or storage of large quantities of stock.

The basic requirements during such applications for a business permit include providing a business plan and elaborate details of measures to minimise the potential impact on neighbours. You must be able to prove beyond a reasonable doubt to the local authorities that your business is compliant with all relevant planning and building regulations.

What to Include in the Application Form

Check out the details required when filling out the application for a business permit form.

  • The type of business you plan to start
  • The products and services you will offer
  • The expected hours of operation
  • The proposed number of employees
  • Records of relevant licences or permissions

Additional details required to complete the application form are your contact information and proposed physical address for the business. This information helps the local authorities in the approval process and how to contact you if they have other queries.

Factors that Your Local Authorities Will Consider

Different factors influence the decision of the local authorities when you apply for a business permit. Firstly, they take into account the type of business you want to start and its impact on the surrounding area. The local authorities or housing commissions also consider if there are established or proposed restrictions that can prevent smooth business operations on that property.

Some factors that might ultimately lead to a rejection of your application include:

  • The business potentially causes a nuisance to neighbours through noise or air pollution 
  • The presence of the business can significantly increase road traffic in that location
  • The proposed business location is a conservation area or listed building 

Business Rates Considerations

Every business that runs on a commercial property is liable to business rates or payable taxes based on the use of those properties. The amount of business rate is calculated based on the property’s value.

Home-based businesses with approved permissions to operate by the local authorities might also have to pay these business rates. The estimate of the commercial property will be the determining factor for the final rate amount.

Business owners unsure about their liability to pay business rates or who have questions about the taxation process can contact their local authorities or Valuation Office Agency. The general requirement is that businesses with a rateable value over £12,000 pay the business rates.

Obtain the Relevant Home-Based Insurance

If you decide to run a business from home, it is important to obtain the necessary insurance. The best insurance policies will depend on your business model and likely interactions with the public.

We have put together four categories of home-based insurance types to consider when running on a commercial property.

Public liability insurance – this type of insurance protects you from losses caused by damage or injury to the public by your business. An example is a situation where a customer slips and falls on your premises, damaging themselves or their possessions in the process.

Product liability insurance – this insurance type is suitable for home-based businesses and covers you for damages or injuries caused by a sold or manufactured product. It offers protection on the sale of food products, cosmetics, electrical goods and other items that get delivered to customers.

Professional indemnity insurance – consider getting this type of insurance to protect against damages caused by professional negligence. For example, legal complaints by a client you offered professional advice that made them lose money.

Building and content insurance – unforeseen circumstances like a fire outbreak, flood or natural disaster can cause damages to business property and infrastructure. Having building and content insurance covers the cost of repairs and replacement for damaged possessions.

Other Insurance Considerations

Apart from the common insurance types, there are other more specific insurance policies you can get depending on the nature of your business. For example, a childcare business primarily requires childcare insurance while a DBS insurance is best for an organisation that works with vulnerable people. There are different insurance types for every business and you just have to ask professionals for advice.

If you run a home-based business, understand you are not automatically covered by standard home insurance policies. It is expected that you check with your insurer for the list of protection they provide. Some insurance policies are specific to some providers and you might need to pay for separate insurance from a different provider.

Home-based business managers should also learn the importance of disclosing every relevant information about the business to the insurance company. An organisation with multiple employees must state that fact to the insurer or let them know if they have walk-in customers who visit the premises. Otherwise, that insurance policy is at risk of being invalidated.

Choose Your Business Structure

The next step when starting a business from home or a commercial property is deciding on a specific business structure. The most common ones are sole traders, partnerships and limited companies.

  • Sole traders – this is the simplest business structure that is also easy to set up. As a sole trader, you are the sole owner of the business and completely responsible for every profit and liability.
  • Partnerships – this is similar to the sole trading business structure but involves a minimum of two people running the business. Every business partner is jointly responsible for the debts and liabilities incurred by the business.
  • Limited companies – it is a more complex business structure that separates the business as a different legal entity from the shareholders and directors. Hence, they are not liable for the debts of the company. A legal company structure is usually for larger businesses but could have only one shareholder who acts as the Director. There is no maximum to the number of shareholders a limited company can have.

Factors like liability, tax and administration of business processes are very important when deciding on the best business structure. You should also consider the size and the type of industry.

Register Your Business

Registration of your business comes after you choose a business structure. It is a legal requirement for every business owner in the United Kingdom to register with Companies House.

During registration, you’ll be asked to provide information about the business, the registered company’s address, and details of the company’s share capital. Additional information can include the names and addresses of the directors.

It is a straightforward process and you might need to appoint a company secretary and register for corporation tax. Your business gets a certificate of incorporation when the registration process is complete. The certificate serves as proof that your company is legal, verified and legally recognised by the government.

Apply for Business Licences and Permits

The process of applying for business licences and permits from the local authorities depends on your type of business. A food business will require a food hygiene certificate before being granted permission to commence sales. A different business like taxi driving would require a taxi licence instead.

We recommend checking in with your local authority for the requirements to obtain a business licence and permit. The requirements vary for different authorities and you should not just make assumptions. Failure to obtain the standard licence and permits can lead to fines or a complete shutdown of the business.

Pay Taxes through Self Assessment

Whether you run the business from home or any commercial property, you will need to pay the relevant taxes due. The overall tax amount depends on factors like the business structure, profits and the VAT registration status.

For self-employed individuals, the taxation process requires completing a self-assessment return for every financial year. The tax return helps HMRC to calculate the taxable income and how much you owe. It is also mandatory to pay National Insurance contributions for those working as employees under their business.

Businesses registered for VAT will charge value-added taxes on all the goods and services they sell. It is also mandatory for such business owners to submit a quarterly VAT return to HMRC.

Keeping to tax returns and payment deadlines is essential especially since failure to comply with tax regulations can result in fines or even jail time. It is best to always stay on the right side of the law by strictly adhering to tax policies. You can also ask questions from relevant authorities when in doubt.

The Pros and Cons of Running a Business from Home

There are some advantages and disadvantages of running a business from home.

The advantages include:

  • You can save money on office rental costs
  • You have more flexibility over your working hours
  • You can avoid commuting costs

There are also some disadvantages 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

Final Thoughts

It is possible to run a business from a council property or rented property provided you have permission from the appropriate authorities. Speak to your landlord or local authority to obtain the necessary business licences and permits. You should also decide on a business structure and obtain the relevant insurance.

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