Running a home-based business….from your garden?

I’ve been running my own copywriting business for 12 months now (in fact, I just celebrated my business’ 1st birthday on 1st July, which is incredibly exciting). So I like to think I know exactly what running a business from home entails, and it can be incredibly satisfying, too.

Everybody has to start somewhere, and home usually feels like the right place. It’s cheap to set up, there’s no extra rent involved, so why not? A garage might seem suitable, but equally, a shed, garden office pod or a proper garden room also works perfectly. Whatever kind of space you’re eying up, you’ll need to turn it into a proper business space, probably with a bit of investment. BUT you also need to ensure the space is completely compliant, too.

This guide, then, has been written by a business owner (me, duh) who works solely from home, and while it does cover some design aspects, it also covers the more important regulations and compliance side of building a business from home.

Key takeaways

• A garage, shed, garden pod or garden room can all work really well as a business base, it just depends on budget, planning rules and how much space you have
• Garage conversions don’t generally need planning permission for the physical changes you’re making, but you might need to apply for a ‘Change of use’ to declare the garage as a commercial space
• You will need additional insurance besides your home insurance, including public liability, employers’ liability and business contents cover
• You’ll need to provide a registered address to Companies House if you’re a limited company
• You need to consider your neighbours and the effect your business could have on them (noise, disruption, parking, etc)
• Fit out your garage properly with electrics, heating and cooling, plumbing, storage, etc. so that it can be a truly useful and enjoyable space to be in, instead of a hot box in summer and an igloo in winter

Contents

• Setting your legal foundation
• Do you need planning permission?
• What about business rates and council tax?
• What insurance do I need?
• How do I register a business address?
• How to deal with neighbours who might have an issue
• Setting up the space for success
• Consider your new layout carefully
• Can I reclaim tax for a garage conversion or garden pod?
• FAQs

 

Setting your legal foundation

I know, this bit is boooorrriiinnnngg, but it is important, so I’m going to cover it before you get too excited buying equipment and desks.

You need to make sure the business can actually operate legally in the space you’re planning. This is the step people skip, and it’s the one that causes problems down the line.

1. Check local laws and restrictive covenants for rules about running a business from a residential zone
2. Get a standard local business license. Check for specific environmental or fire safety permits if completing light manufacturing, woodworking or using chemicals in the space
3. Home-based business insurance endorsements are important for companies that involve commercial equipment or inventory

These laws are even more important if your business involves customer foot traffic or deliveries. If you’re setting up a freelance solo home office (like I did), it’s easier and there might be fewer restrictions, but the rules changes if you’re adapting an existing structure, like a garage or shed, or if you’re adding a new structure, like a garden room.

 

Do you need planning permission for a garage conversion?

To put it simply, you don’t need planning permission if the work falls under permitted development rights. Basically, as long as the garage size stays the same, the outside appearance stays the same and the space isn’t being used for residential purposes, you’re good to go ahead.

However, you will need planning permission to apply for a ‘Change of use’ to declare that your garage is becoming a commercial space and being used for business purposes. Every area is different, and so some people might not have to apply for this, but in some areas, it’s prohibited to use a residential garage for commercial purposes.

Therefore, even if you aren’t renovating your garage or changing its size, I’d still recommend that you check with your local council or your local planning department to be on the safe side.

 

Do you need planning permission for a new garden pod?

Most garden buildings fall under what’s called “permitted development,” meaning you don’t need to apply for formal planning permission, but only if you stay within a fairly specific set of rules:

• The building can’t exceed a height of 2.5m when it’s within 2m of a boundary
• When it’s further than 2m from the boundary, you can go up to 4m with a dual-pitched roof, or 3m for a flat or single-pitched roof
• The building has to sit to the back or side of your garden/house and not at the front
• The new structure, combined with existing sheds, extensions or outbuildings, can’t cover more than 50% of the land around the original property
• You can’t add a veranda, balcony or raised platform (permission is needed).

The rules are significantly stricter if you live in a listed building, a conservation area, an Area of Outstanding Natural Beauty, a National Park, or your property has an Article 4 Direction attached to it.

 

What about business rates and council tax?

This is one of the most commonly missed pieces of the puzzle, and it can catch people out, so listen carefully!

If you convert part of your home for business use, like a garage or garden building, you may become liable for business rates on that portion of the property, separate from your council tax.

Contact the Valuation Office Agency (VOA) in England and Wales, your local assessor in Scotland, or Land & Property Services in Northern Ireland to find out whether your set-up qualifies. If the rateable value comes in under £12,000, you’ll likely qualify for small business rate relief, which can significantly reduce or eliminate the additional cost. Whether you’re liable at all ultimately comes down to how exclusively the space is used for business (a garage that’s still used for storage but has a desk in is a different situation to a fully-converted, business-only studio.

 

What insurance do I need when running my business from home?

The original assumption a lot of people make is that their existing home insurance extends to cover a home business. Reader, it does not! And this is one of the fastest ways to invalidate a policy without realising it. You will also need:

• Public liability insurance, which is a necessity if you have customers or clients visiting your garden or garage workspace
• Employers’ liability insurance, which you only need if you have employees or staff
• Business contents cover

Even if you aren’t taking out a new insurance policy, you should still tell your current buildings and contents insurer about the change of use so they don’t reject a claim should you ever have to make one.

 

How do I register a business address?

You don’t need to provide a business address to Companies House unless you’re a limited company, so sole traders or freelancers won’t have to worry about this. However, if you’re a limited company, you might be wary about making your home address public, understandably. In this instance, you can see whether an accountant, solicitor or registered office service can act as your correspondence address instead, you could look into a PO Box as an alternative option.

 

How to deal with neighbours that might have an issue

While you should be able to do whatever you like with your space at home, your neighbours might have an issue with constant deliveries, comings and goings or noise. When these things irritate them, they can actually report a statutory nuisance to the local council, and it’s worth thinking this through early instead of once a complaint comes in.

It might be worth talking to a neighbour if they’ll be directly impacted by your new garage or garden working space, and just let them know that you might have customers coming to the house and that you’ll do what you can to tell them where to park, etc.

You might also want to plan ahead and think about how you can make things slightly less disruptive for them, while still allowing you to work. Could you keep any noisy work behind closed doors? Avoid very early or very late working hours? Tell customers where to park in advance? A bit of preempting goes a long way here.

 

Setting up the space for success

So you don’t want to put alllllll this effort into your home working space, only for you to realise it’s not efficient. Garages are built for cars and storage, and therefore tend to get quite hot (or very cold), and so you’ll have to consider how you’ll keep it cool or warm, and how you’ll run electricity to it. You might also want to consider access and how easy or difficult it is to get into the garage or garden room.

So, here are a list of things to think about to make your garage much more suitable and practical for working from:

• Improve access by installing some garage side doors so you can easily get some fresh air without having to open the entire front up
• Make sure that all walls and doors are properly insulated. This matters even more for garden buildings than garages, since many aren’t designed for winter use
• Install a heating and/or cooling system so you can control the temperature all year round
• Think about installing a new sub-panel or some additional circuitry to ensure you can run all your computers and equipment
• Swap out the original lighting and install some work-ready LED lights. Don’t try to run a business under a flickering single bulb! 
• Think about connectivity, including WiFi and powerline adaptors, especially if your garden room is the opposite end of the garden to the house.

You’re going to be spending a lot of time in this garage, so you mustn’t dread the very short commute from your house. Also, make sure to have some dust control elements in place for safety reasons and to keep your home clean. 

 

Consider your new layout carefully

Try to think of your garage as a legitimate corporate space in terms of layout and workflow. The space needs to work for your business, or you’ll end up hating it. For digital businesses, like mine, it’s easy to just set up a couple of desks and some monitors and off you go. But for businesses with stock coming and going, it’s not quite as simple and you need to be able to move through the space and be able to find everything you need.

You can do this with zoning. Now, zoning works in a home as well. It’s about separating one space into smaller usable sections that each have their own purpose.

For your garage, you could have one corner for raw materials, components and inventory, a production zone where things are made, a storage section for finished products that are waiting to be bought, and a packing/shipping zone for items that need to be packaged and sent out. This is a great, logical sytem that works well for a business running out of a garage. Also, vertical shelves are your friends for making the most of your space. 

 

Can I reclaim tax for a garage conversion or garden pod?

Okay, there are definite rules around this, so I’ll explain as easily as I can.

If you have paid for your garage conversion or new garden pod through your limited company, you won’t be able to claim any part of the planning, building or installation. However, you can get tax relief via capital allowances on any furniture or equipment that needs to be purchased for that space, including desks, seating, shelving, etc.

What also counts as ‘capital allowances’ is services into the building, so the electrics, the insulation and the plumbing, so you might be able to claim these back. Capital allowances can only be claimed by VAT-registered businesses, so usually not sole traders.

Then, as you can with standard home-office deduction, you can claim relief on the utilities used to run your business, such as broadband and electricity.

 

FAQs