I am in the same exact situation (minus mortgage part).
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Trojan
"Chance favours the prepared mind"

You "should" tell the mortgage company and if it is a home office for dealing with the gas bills etc there shouldn't be any difference. Using that home office to catch up with some work again no probs, and so on. It is only if you have meetings and stuff I think that they may not like it. Insurance is different. Some policies do not cover you for home office although being at home more should mean less risk. If you make any money (and set out to do it) you will need to register as self employed with the IR
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www.youcangetit.co.uk - Business services and community. Do you get it?

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[i]Originally posted by moonbeam[/i] [br]Hi I am hoping to set up a business at home involving crafts, but I am confused about the legal issues relating to working from home. I have been to business link and they have been excellent but have thrown so much information at me i am unsure of what to do next.

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I have the product, the supplies i need and i have the website, so i'm just about ready to go with it. My questions are: How does working from home affect a mortgage, does it increase it a lot? The room where i would be working would still be used for it's original purpose. I presume some people working from home don't tell the mortgage company!

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Do i need extra insurance, what? and how much extra is it likely to be?

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As a sole trader would i need to register the trading name? If i don't register the name am i at risk in any way? (i have checked companies house, and trade names on the net and couldn't find anyone else with the name)

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I'm not sure if i should do this just as a hobby or if i should set it up officially. I am not aiming to make a fortune and if the extra money i have to pay out each month is high it may not be worthwhile. If i do it as a hobby i presume that all i have to do is just give the tax man a call and inform him of what i have earned over the yr?

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Cheers, Phil

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I'd advise contacting your insurance and let them know exactly what you are doing. Remember also if you have a customer, or maybe sales rep/supplier visit you at home and they have an accident your home insurance would probably not cover you against a claim. My broker has a package particularly for homeworkers that will cover you for the unexpected like above. Can't remember the name of the package but can find out if its of interest. Mark
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Thanks for all the replies, they are very useful. The only people coming to the house would be the people delivery any stock i may need, but they would not enter the house. Mark - i would be interested to know the package you mentioned for 'homeworkers' thanks [] Phil - why would i need to contact the local planning department at the council? bit confused about that one. Thanks all[] Moonbeam

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[i]Originally posted by moonbeam[/i] Phil - why would i need to contact the local planning department at the council? bit confused about that one.

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Cheers, Phil

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If no-one is coming to your house, other than for deliveries, I would suggest you simply look to your household policy for cover of business assets. My policy (I work from home) is extended for no additional fee, although I do have separate indemnity cover. You don’t need to tell the council if you are simply working from home in a room shared with non-business activities, unless you particularly want to pay business rates. There are thousands of home workers in the UK, and it only really becomes a practical issue if what you are doing is disruptive to your neighbours. Regarding whether this is a "hobby" or a "business", if you make money out of it, it is technically a business and you should register as self employed. This means you would then need to fill in a tax return every year. If you have no other sources of income and make less than £4,500 per annum the IR are not going to get very excited about you as there would be no tax to pay, the worst that could happen would be the £100 fine and a big pile of returns to fill in, that would lead to no taxation. If you have other income that you pay tax on you should register, as this additional income will be taxable. Hope this is of help. Regards,
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James Smith
Chartered Accountant
www.jamesesmith.co.uk

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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT

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[i]Originally posted by James Smith[/i] You don’t need to tell the council if you are simply working from home in a room shared with non-business activities, unless you particularly want to pay business rates. There are thousands of home workers in the UK, and it only really becomes a practical issue if what you are doing is disruptive to your neighbours.

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Cheers, Phil

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I just took Business Links advice on face value! :-)

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£200!!! At least I din't have to pay for my crap advice! :-) To be fair to them they did give me a lot of help of which 90% seems to be paying off now... Cheers, Phil www.simplycfhost.co.uk - Top quality hosting from just £4.99 per month www.openmindmedia.co.uk - Simple, effective and powerful design solutions Call 0845 351 0413 today and find out how we can help your business succeed online.
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Cheers, Phil

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Thanks Phil and Robin, i don't think i will be disturbing the neighbours, not unless i put a jet engine on my sewing machine[] One thing that puzzles me and hubbie, is that the money i will be puting in would have already been taxed (hubbies wages) does it make any difference to the tax i would pay? (If i earn over the £4500 that is.) As for Business link go, i found them very useful but far too much info to take in at one time when you are just beginning. I didn't have to pay to see them, and they have lots of free courses too which maybe useful in the future. Thanks again guys, this site is great[] Moonbeam

You might be interested in joining my club (free) - it's a group of business people who all work from home and is a great source of advice and guidance for those of us who choose to work in this way - from people who have being doing it for years. We have an active message forum and you can join here: http://www.ecademy.com/module.php?mod=club&c=46 We have 291 members now! Regards Amanda
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Regards

Amanda


Truly Ace Graphic Design Blog


Logo Design I Web Design I Print Design

Phil - re telling the council - I don’t doubt that "officially" you probably should tell them that you are working from home, as your house only has planning permission for domestic usage, however I don’t think anyone actually really cares so long as you aren’t being a nuisance. We seem to be talking about small scale one person operation here working out of the spare bedroom. To go to the other extreme if we where discussing a house divided into proper office space employing a couple of people with daily multiple deliveries and visitors to/from the house then yes you should certainly be looking to get planning permission for change or use and paying business rates etc. I think its about context. Regarding the already taxed money being invested in the business, the source of funds is irrelevant, but any money you do invest in business items would be offset against your profits. You only pay tax on your profit – your income less your costs. Some items such as your sewing machine would be "capital" and the cost would be spread over a number of years, so you need to be a bit careful.
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James Smith
Chartered Accountant
www.jamesesmith.co.uk

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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT

Hi Amanda Thanks for the link but i must admit i am a little confused as to what it's all about. It seems to be about becoming a 'Power Networker'?? Having read through some of the information it is ringing alarm bells with me, i mistakenly got caught up with a 'networking' business years ago. Once bitten twice shy as they say! moonbeam

Hi James Thanks for your reply, yes, it will be small scale to start with, although the dining room rather than bedroom [] but we all have to start somewhere. Thanks for the Tax advice, it's very useful to be able to talk to others who have knowledge of such things. Moonbeam

I AGREE WITH JAMES SMITH. But then insure your equipment under a assurance cover that includes losses etc if something terrible happens, about telling morgage co, it has nothing to do with them, actually check your morgage agreement; plug in your pc and kick off: remember the only people that should know really are business house of companies, anyway why are you not registrating a ltd limited co: never : never: put a business in your personal name: never: protect your family and house: also the cost is nothing more etc
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Brian Fin

www.businessbx.com

www.courtico.com
on

Most mortgage companies do include a clause to require notification of a business being run from the premises. The local council also have a legal interest in this in some cases. Not to notify compounds any problems as in most cases unless the business is atracting commercial visitors to the home then there will be no issue and permission will be granted. Running a business from home can also invalidate your insurance policy unless the insurance company are notified. Brian gives robust advice but the penalties from above particularly the insurance aspect can ruin lives so a little planning goes a long way.
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LawHound Limited www.lawhound.co.uk
01244 300413

HELLO EMPLAY ACTUALLY MY ADVICE WAS GOOD. Read what I am saying. To be more clear for you, so you can understand. I said;- 1 check the morgage agreement. He is not running an explosives co but a quiet e-business, there is no risk. 2 I said insure the equipment under its own insurance cover 3 I said inform which is natural when you register; companies house and of course vat will be done automatically. Do I have to spell it out. You do not need to tell your cat mate.
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Brian Fin

www.businessbx.com

www.courtico.com
on

Brian, I think you will find that the vast majority of mortgage agreements in the UK do insist on you telling them if you intend to use ANY part of your home for business purposes. The insurance I agree with to some extent. If your standard home poilcy does not cover the equipment, get another policy. Simple... VAT automatically? I think not. When you register as self employed the IR will inform customs and excise and they will write to you about registering for VAT but the proces is by no means automatic... One other thing. I have consulted Lee in the past fro legal advice and I have no doubt that when she posts on these forums her points are based on fact and experience. I don't really think it's necessary to be sracastic in your posts when she is merely correcting you. Cheers, Phil www.simplycfhost.co.uk - Top quality hosting from just £4.99 per month www.openmindmedia.co.uk - Simple, effective and powerful design solutions Call 0845 351 0413 today and find out how we can help your business succeed online.
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Cheers, Phil

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Thank you Brian, You have made the point about your own professionalism far better than I could do. What exactly made you so aggressive? The point you are making about insuring the business items is not detailed enough. Most household insurance polices will not cover the premises unless they are on notice. So the buildings cover may not be claimable unless the policy holder gets agreement following notification. This is even more important if the mortgage and insurance are tied and most are even if you get your insurance sorted out through another company. So potentially your advice is dangerous and could place someone acting on it in an exposed position.
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LawHound Limited www.lawhound.co.uk
01244 300413

Emplay and simple, I gave advice, generally it is for him to get into more detail. You started with the right: wrong thing on this forum we ask for someones opinion if you going to start pointing fingers then get off. One; Now I also have a house loan in England and my agreement does not state that I can not run my own business from home other than items above the norm, meaning dangerous acts, so is the internet business a dangerous act, for example storing explosives. Two; it is better to get the insurance on its own, a business policy: and keep it separate from household, so he can be covered for turnover losses as well. here barclays startups will help with the set up. Third, As for the vat he has to register automatically,it is a obligation, unless he does business otherwise, mate, so he must give his business address. Let us get down to it, I may live in france but I know The UK business regulations very well, why don't yoy try me on some? Also if our forum friend is really thinking that he is out of line by not informing the loan company: then I would send them a registered letter. Believe me, i bet a good old english dinner on this, he will not have a problem as long as his business is safe and legal. Now if he is employing someone then the insurance ball will change. So mate take me a bet. actually the only one giving advice is me, you attacking everyone, give the man some advice and let him analyse the input. Yours I will not consider.
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Brian Fin

www.businessbx.com

www.courtico.com
on

eh?

so moonbean from all the opinions received, what are or have you decided. Anyway we wish you the best in your new adventure.
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Brian Fin

www.businessbx.com

www.courtico.com
on

Brian, You're home mortgage agreement may well allow you to do whatever you wish with your home but moonbeam may be in a different situation so you cannot state that he does not need to check. Insurance for contents and insurance for business losses are two totally different things and will have their own seperate policies. Home insurance can sometimes cover a business. I know mine does because I asked them! Everyone's policy is different and again, all he needs to do is check. He could save money but not having to take a seperate policy. VAT, I'm getting bored with saying this but he does NOT get registered automatically. If his business turnover goes over the threshold or he expects it to or he wants to register voluntarily he must contact the C & E team off his own bat. They will not register him automatically! My final point is noone is attackng you. You are welcome to voice your opinions as this is a public forum but please do not expect others to simply keep quiet when you post innacurate or simply wrong information. Cheers, Phil www.simplycfhost.co.uk - Top quality hosting from just £4.99 per month www.openmindmedia.co.uk - Simple, effective and powerful design solutions Call 0845 351 0413 today and find out how we can help your business succeed online.
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Cheers, Phil

www.openmindhosting.co.uk - Top quality hosting from just £4.99 per month
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My opinion is not wrong: read what I have said : you haven't understood one word: i hope for his sake he doesn't put his insurance under one insurance and as for the morgage: I said, to be safe he can send them a letter. as for Vat it is an obligation for him to register and get a number: as for me I do not deal with anyone that has no vat number.
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Brian Fin

www.businessbx.com

www.courtico.com
on

Hi Moonbeam, Thought this might clarify the situation re: VAT From the HM Customs & Excise site at http://www.hmce.gov.uk/business/vat/vatregist.htm snip... Registration for VAT is compulsory in certain situations, but also available on a voluntary basis subject to specific criteria. The rules for both are summarised below. You MUST register for VAT when: The value of your taxable supplies exceeds the registration threshold If the value of your taxable supplies in the past 12 months or less has exceeded the current VAT registration threshold of £58,000, or the value of your taxable supplies in the next 30 days alone is expected to exceed this threshold, you should read the publication below and complete the application form. --------- The site goes on to cover the distance selling, EU and other situations. Good luck with the venture, Yours, John www.newmerchant.co.uk UK Company Formations, Nominee services & Business support services.
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Yours,

John

Wow, i didn't expect there to be so many replies, and some disagreements too, didn't want that to happen but it all makes interesting reading. Someone asked what am i going to do after reading the replies, well, when i am ready to set it up as a business i shall contact the mortgage company as it does state that any changes in the use of the property should be approved first. I don't see it as being a problem as the room i will be using will also still be used for it's original purpose. I shall also be contacting the insurance company (not connected to mortgage) to see what i have to do there with regard to insuring the equipment etc etc. I shall contact the IR as required. VAT...not something i had thought much about as the man from Business link said i wouldn't need to bother at this stage, going on Johns figures above, he would be right. So, bearing in mind that the Business would be just me, at home, making a craft type product, selling mainly on the internet and possibly through a few small outlets in the uk. IR...to be done. Insurance...to be done. Domain name..done. Business name...not registered with companies house due to cost and and the fact that i would be a sole trader not Ltd company (business links advice). Although i have done online searches for the name, none found. Without wanting to stir up a hornets nest here, do i need to consider anything else? Moonbeam PS i am a she []

KEEP US INFORMED BUT DO NOT FORGET TO REGISTER THE COMPANY NAME AND AT THE SAME TIME THE DOMAINE AS JAMES SAYS. good luck Your business will take a long time to grow have patience.
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Brian Fin

www.businessbx.com

www.courtico.com
on

I would just like to say thanks to everyone who has taken the time to reply to my posts. It can be very daunting when first starting out and you have all been a great help. I'm sure this thread will help others thinking of working from home too. Thanks [] Moonbeam