Can I start my business by working from home?
Working from home requires considerable self-discipline and will not suit everybody. However, it is an excellent way of starting a new venture when the business proposition allow, particularly because you will incur lower overheads during the critical stage of establishing the business.
It will also allow you to claim a percentage of your property’s running costs as an office. However, there is a danger that, if HMRC considers the claim excessive, it might launch an inquiry that could result in disallowed costs and an increased tax bill.
There is also the possibility of a capital gains to tax liability when the property is eventually sold. If you decide to work from home, consider notifying these organisations:
- Your local authority: there may be a case for paying business rates but it is unlikely if the local authority decides that there has been no material change in the use of the house (from residential use)
- Your insurance companies: your contents insurance will probably need to specify any business asset such as computing equipment etc, to ensure they are covered.
- The bank/ Building society (if you have a mortgage) : this is usually a formality but it is advisable in case there is a potential breach of the mortgage agreement.