More and more people are setting up their own independent businesses. Running your own small business provides flexibility and the opportunity to manage your schedule and finances. If you’re planning to launch your own startup with your house as the business premises, then you might be asking yourself ‘do I need permission to run a business from home?’
It’s not a dumb question as you might not actually be able to run a business from home, even if you own your own house! It all depends on your circumstances. Let’s take a look in more detail at the varying factors.
Table of contents
- Are you allowed to run a business from a residential home?
- Can I run a business from home without planning permission?
- Apply for a Certificate of Lawful Use to prove you don’t need planning permission
- Can I run a business from home with a mortgage?
- Can you run a business from a council house?
- Can you run a business from a rented house?
- Do I need a business licence to run a home business?
- Will my home insurance cover my home business?
- Do I need to pay business rates for my home business?
- Final word on do I need permission to run a business from home?
In some instances, yes you can run a business from a residential home completely legally without issue. For example, many people are choosing to set up an online business nowadays and these can easily be run from any location so long as there’s a place to sit, a laptop and a WiFi connection.
Starting a new business that’s 100% online really isn’t going to impact anyone else or change the state of your home, so they are generally considered suitable for running from any residence.
However, some businesses are a little more complex such as those that serve clients at the residential property or require stock to be delivered and picked up.
Some businesses might be noisy, smelly or disturb your neighbours at unreasonable hours such as boarding animals in your garden perhaps or running a late night food delivery service.
It’s factors like these that might cause a nuisance to your neighbours or a large change to the property and may require planning permission to proceed.
Government planning policy advises ““Planning permission is not normally required to home-work or to run a business from home, provided that a dwelling house remains a private residence first and business second”.
It really depends on the type of home based businesses you wish to run and whether you want to make any alterations to your home for business use. It’s not completely clear-cut either.
The times when you may need planning permission include:
Your entire home is going to be used for business purposes and not as a private residence
Your business will impact on your neighbours
Your business will cause a large amount of traffic or footfall
As the Planning Portal explain “Whatever business you carry out from your home, whether it involves using part of it as a bed-sit or for 'bed and breakfast' accommodation, using a room as your personal office, providing a childminding service, for hairdressing, dressmaking or music teaching, or using buildings in the garden for repairing cars or storing goods connected with a business - the key test is: is it still mainly a home or has it become business premises?”
If you are working from your home without changing the structure, causing excess traffic, having people turn up regularly or causing any unusual noise or disturbance in a residential area then you are likely fine to run your business from home without permission.
As the Planning Portal go on to explain “If you are in doubt you may apply to your council for a Certificate of Lawful Use for the proposed activity, to confirm it is not a change of use and still the lawful use.”
Failing to get the appropriate permissions if needed can result in legal action being sought against you from a neighbour or the council. If you have altered your property for business use then they may require you to return it back to it’s original state and purpose. This can all cause problems further down the line too if you want to sell your property and haven’t changed it’s use when it’s legally required.
Apply for a Certificate of Lawful Use to prove you don’t need planning permission to run your business from home
One way you can cover your home business from the getgo, if you don’t require planning permission for your home business activities, is by obtaining a Certificate of Lawful Use from your local council. This certificate will legalise the use of your home for your business activity providing it doesn’t require planning permission.
It essentially proves you don’t need planning permission for the type of business activities you are doing from your residence and confirms it is lawful.
It will prevent an legal action from a neighbour or nearby resident should they complain about your business activities.
Your legal team should advise whether you really need one, as should your local council if you are worried it may be a waste of time and money to apply.
However, you are not guaranteed to be issued a certificate. Your local council may refuse if they believe your business does need planning permission, so it’s best to do your research, use your common sense about how your business will affect your neighbours and local residential area and seek legal advice if you are unsure.
Regulations surrounding setting up a business and providing services to customers can be complex. This is why it’s beneficial to seek advice from experts in corporate law from the outset. Legal firms can help you to structure and register your business and ensure that you are fully compliant.
If you have a mortgage then check the terms before starting your home business. It may be against the terms of your contract and inthe worst case sceranrio, the lender could require early repayment of the loan.
If you already run a business from home and are taking out a new mortgage deal then you’ll likely explain your line of work to the mortgage adviser and they’ll be aware you work from home to ensure they find a suitable mortgage that allows this.
Even if you own your home, with or without a mortgage, there may be a restrictive covenant in place that prevents you from running a business at home. Sometimes the covenants are very old and put in place at the time of the development to grant the planning permission needed for the builds, so decades later they may be quite irrelevant. You can always approach a solicitor to see if the covenant can be removed or whether indemnity insurance can be taken out to protect you.
If your home is leasehold then the lease may restrict any business use or require permission. Check your lease to ensure you don’t breach the terms as you don’t want the landlord to end the lease for you breaking it!
Yes, you can run a business from a council or housing association home, but you’ll need to get permission first.
It’s good practice to get this in writing to make sure you don’t have any issues further down the line. Keep the written consent somwehere safe as your proof permission was granted.
Your local council or housing association will want to ensure the business use is reasonable and won’t cause a nuisance to your neighbours. They won’t refuse permission for you to run a home business from a council house without good reason.
Quite simply, yes you can, but get written permission from the landlord and make sure all the legal rules are followed.
Explain your business plans to your landlord clearly outlining the nature of the business and activities and how their house will be impacted by this, if at all.
Even if your landlord gives permission, you will still only be able to run a business that doesn’t require planning permission and that obviously doesn’t alter your landlords home!
Not all businesses require licences so it will depend on the industry. If you have a food business then you must register with your local authority. You can enter your postcode here on the government’s website to apply for this licence. You are meant to register 28 days before opening. It’s really important to register as you can be fined or imprisoned for two years if you runa business without a licence.
Other types of specialised businesses also need licences such as selling animals, selling alcohol, health and beauty businesses such as hairdressers or piercers, childminding and more. To find out if your business needs a licence you can check here: https://www.gov.uk/licence-finder
Licence fees vary from around £100 up to nearly £2000 depending on the trade, so make sure you find out the fee and factor this into your startup costs.
This will all depend on each insurer and the nature of your business. Your buildings and contents insurance will likely not cover anything that is business related, so you’ll need a separate insurance for this.
It’s a good idea to take out a separate business insurance to cover public liability and professional indemnity for your business anyway. Business insurance usually has optional add-ons such as business equipment so you can protect the items in your home that are specifically business use like a laptop or phone.
You don’t usually need to pay business rates for a home-based business unless you have specifically changed a part of your home into a business and changed the use. In this case, you will have to pay business rates on the part of the property that is used for business. If you need to pay business rates you’ll need to contact the Valuation Office Agency of if you’re in Scotland, contact your local assessor.
Whether you rent or own your home there are usually some permissions you need whether that’s from the landlord, your mortgage provider, removal of a restrictive covenant or even planning permission if you’ll be adapting your property, disturbing the neighbours or changing its use.
You may also need business insurance, a business licence and you may need to pay business rates.
The best thing to do is thoroughly research what type of home business is acceptable and the rules and regulations in your local area. Seek legal advice from a solicitor and your local council. The government websites are very useful in providing a lot of information for starting a business and were a wealth of information for both me and my husband when setting up our first self-employed businesses as sole traders working from home.
If you are simply going to be working from home and making money on a laptop then there probably aren’t going to be any permissions you need, however you may still need to ensure you have business contents insurance for your business laptop as your home insurance might not cover it, and check your mortgage terms if you have one.
You do not always need permission to run a business from home. However, don’t forget you need to register with HMRC if you're a limited company, self-employed, or your turnover exceeds the small profits threshold.
Related helpful blog posts:
- How working from home can save money
- How to manage your time effectively when working from home
- The pros and cons of working from home
- 7 things to do when starting your own business
- 6 handy tax tips for bloggers and self employed
- How to deal with disruptions when you run a home business
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