The entrepreneurial dream is one shared by many, but the choice of place of business has always been one of the larger barriers. Whilst some businesses producing products don’t need a storefront, and some services revolve around travel, not all are so lucky. Well, for those living in a rented home or local authority-owned property, we have good news – you can run your business from there if you have permission.
But how do you go about getting this permission, and what are the challenges of conducting business from this locale? In this article, Real Business will outline these and more.
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How Do I Get Permission To Run A Home Business From A Property I Don’t Own?
Typically, the main reason you need to get permission is due to the tenancy agreement. If there is no clause mentioning that you must get permission to run a home business, then you may not need to at all. But in cases where it exists, it doesn’t matter if even an administration job that disturbs nobody is occurring within those four walls.
Before starting your home business:
- Rented property – Get written permission from your landlord to run a business from the property.
- Local authority-owned property – Obtain permission from local authority. You may need to submit a business plan, and details of the operations intended and prove compliance with relevant regulations.
Why Do I Need Permission?
Typically, you need permission to run a home business because, in some cases, a tenant’s business may change the property’s value or disturb neighbours such as with customers visiting your premises.
Depending on the work you’re going to be doing, you may need a massive host of other checks and balances aside from permission. Putting typical licensing aside, the following are some examples:
- Planning permission – If you are making structural changes to the property, or if there is going to be an increase in traffic or visitors due to the business, you will need planning permission.
- Health and safety assessments – If employees or clients are visiting the property, you may need to meet health and safety measures.
In the event of the local authority denying your permission claim, you can challenge the decision by appealing.
If you’re rejected, it’s harder to pursue a resolution:
- Unfair Contract Terms Act 1977 – If your current tenancy agreement contains an unreasonable clause prohibiting business use, it may be challenged as an unfair term.
- Judicial Review – If the landlord is a council or housing association, you can challenge the decision on grounds of irrationality, procedural unfairness, or illegality.
- Breach of Quiet Enjoyment – If the business is non-disruptive and refusal hinders lawful use of the property, this could violate the tenant’s right to “quiet enjoyment” under property law.
- Civil Court Claim – File a case to seek a declaratory judgment that the landlord’s refusal is unreasonable, particularly if no valid reasons are given.
What To Include With A Business Permit 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
Do I Have To Pay Additional Tax?
No, you don’t have to pay additional taxes related to the property. That being said, you may have to pay additional taxes, such as council tax. If a certain section of the home is being used exclusively for business, for example, then you may have to pay business rates.
That being said, there are tax allowances you can take advantage of to offset this:
- 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.
Will I Have To Pay Business Rates?
Every business that runs on a commercial property is liable to business rates or payable taxes based on the use of those properties. Home-based businesses with approved permissions to operate by the local authorities might also have to pay these business rates. The amount of business rate is calculated based on the property’s value.
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.
Do I Need Business Insurance?
Aside from permission, it’s also worthwhile to get the related business insurance and inform your local council or landlord of these plans. This is because, without it, there are instances where the landlord can be held liable. Business insurance negates this, as it covers the vast majority of incidents that can result in legal liability.
The business insurance in question is as follows:
- 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.
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.
That being said, during registration, you’ll be asked to provide information that you need to pay extra attention to in the context of running a business from a home you don’t own:
- Registered address – The company must have a registered office address, and you cannot use your current abode without express permission. That being said, you can use a professional address service instead.
Conclusion
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. It is crucial to distinguish between personal and business use of the property to ensure compliance with tax requirements and tenancy agreements. You should also decide on a business structure and obtain the relevant insurance.
