Unfortunately, it’s not as simple as it sounds. If you want to set up a home business or work from home it may affect your home insurance, tax situation and even your mortgage.
Make sure you’re legally able to work from home!
If your business will take over a large amount of floor space you may need planning permission. Less than 40% floor space and you probably won’t need to change the purpose of the property or be subject to business rates. Although, if you convert part of your home to be a dedicated space, such as a workshop, then you will likely have to pay the relevant business rates.
If your business will cause a nuisance to your neighbours, such as loud noises at unreasonable hours or creating lack of parking, then you may struggle to get permission.
You need to make sure that your home wasn’t sold with a restrictive covenant. These are promises written into the deeds of the property which stop the owner from being able to make changes to the detriment of the surrounding land or property values or character – some of which restrict the uses of the property. If you discover your property is subject to a restrictive covenant, you should contact a conveyance solicitor to see how the situation can be resolved.
Let your mortgage lender know!
The Council of Mortgage Lenders says that you should let your mortgage provider know that you are working from home.
Many people don’t tell their provider, either because they are unaware they are required to do so, or are worried that the provider will issue them with a higher commercial rate - whilst it is possible, it is unlikely, according to the Council of Mortgage Lenders. Realistically, as long as you stick to less than 40% floor space rule, you should be fine.
Get the right cover!
Depending on which trade or industry your business falls under, your average home insurance policy may not cover you should there be an incident.
Most home contents policies do not cover items once they have left the home, so should you drop your laptop on the way to a meeting you’ll have to fork out for the damage yourself.
If you have any clients or customers that visit you at home you will need to take out some kind of public liability insurance.
If you have employees you will be legally required to take out employer’s liability insurance. This protects you should an employee claim against you if the business goes in liquidation or receivership.
There are rare instances when employer’s liability insurance is not compulsory. If your business is not registered as a limited company, or your only employees are family members you may be exempt - but it is probably wise to have cover, just in case.
If you are required to drive for your business you will most likely require business insurance for your car. Some domestic policies cover occasional business use, but it’s better be sure than to find out after an accident that you’re not covered - it would make a very bad day at the (home) office!
