So, can I run a business from my shed in 2024? Well, the simple answer is yes you can, but there are some things you must consider. There are issues that could cause you problems and may in certain circumstances, disqualify you from running a business from home.
When it comes to the law the exact location of where you run the business in your home doesn’t really matter, be that in your garage, shed or box bedroom. (*Post updated 26th March 2024)
Personally, I use my shed in the garden and I’ll explain why that is later in the article. Firstly, let’s take a look at the legal side of things and what you should look into before going ahead and setting up shop in your shed!
Running a business from residential property
According to the Office of National Statistics (ONS) 34% of all workers during January 2021 worked from home in Great Britain. A further 9% went to work but also did some work from home.
Those numbers include employees, as well as self-employed, but the number of people now working from home who are effectively running their business from their home address has increased dramatically since the Corona virus outbreak.
Here we go through most of the ramifications of running a business from your home whether you own or rent the property.
If you live in a private rented or council property that adds a few additional things to worry about, but we will cover those later in the article.
By the way, if you are a looking for a company credit card check out my article here.
Property types
The law is clear, there is a difference between residential property (owned or rented) and business premises. In recent times though the line is getting a little blurry. Even before COVID-19 and lockdown the number of people working from home, at least part of the time, was increasing.
There is a difference though to being an employee who works from home or an SME (Small to Medium Enterprise) which is trading from home. The type of property, house/flat etc, it’s all the same in the eyes of the law and where you physically are in your property (inside or out) to actually do your work doesn’t matter.
So, choosing the shed in the garden in preference over a study or bedroom inside your house doesn’t alter things legally.
The type of SME, for example a freelancer, a partnership, sole trader, or limited company doesn’t make any difference either. If you are effectively running a business at your residential property, you’ll need to check out a few things.
What you need to consider
I don’t doubt for a moment that there will be many people who are effectively running a business from home and don’t ever tell anyone. If you are for instance a taxi driver, they you will say you earn your living out on the road, but where do you sit and do your books? Do you have a phone line in the house that takes bookings?
I suspect there are a great many bloggers who earn very small amounts from their blog who have never declared it to anyone.
Are these people ever likely to get into trouble for this? I’d say it is unlikely, but it still doesn’t make it right. Certain what I call “quiet businesses” could work based at home and never have an issue and who would know or care?
There are probably hundreds if not thousands of people who quietly run a business from home who just need a desk, a filing cabinet, and a computer. I would strongly stress though that I am not advocating that. I declare all my earning and have filled out a self assessment for many years, so I think everyone else should do the same.
On the other side of the coin, you have “noisy” businesses. What if you have a garage and a shed full of stock with delivery vans pulling up to drop off or collect stock all day. Is there noise, machinery, members of staff coming in and out etc that means you are going to get noticed.
You are going to get noticed potentially by neighbours, some of whom may wish to make it their business to know if you have all the correct permissions to be running a business from home.
So full blown business premises at your home address will give you bigger potential headaches. Complaints from neighbours, who could have genuine grievances based on noise, traffic and parking issues caused by your business.
What permissions do you need?
First off if you have a mortgage, what does the bank/building society feel about you running a business, from the property? They may have issues if they consider it a material change to the usage of the property, which don’t forget is security for the mortgage you’ve taken out with them.
The mortgage lender would be in the right to object if, what you were doing would devalue their asset by affecting its re-sale value detrimentally.
Landlords Permission
If it is a rented property, you’ll need to ask the landlord and if it’s a council property, you’ll need to check with them. All landlords, private/council/housing associations, will have concerns about wear and tear on the property, especially if they think what your doing is industrial or will cause a big increase in footfall.
Private landlords though also worry equally about getting their rent paid so if they think your primary means of income is going to disappear if they say no, that might sway them.
Legally tenants can work from residential properties with the landlord’s permission, so long as the property is still predominately a residence. So, if like me you work from the shed, but the rest of the house is totally unaffected that is fine.
Now as I said above legally you can run a business from home and the landlord cannot just dismiss it out of hand and refuse permission for no valid reason. They are also duty bound to decide in a timely manner whether to approve/disapprove your request. They can’t just drag out the decision as a time wasting tactic.
They (landlords) have 3 things to worry about.
First the wear and tear I mentioned above and secondly does it look like you tried to rent the property with the real reason being a cheap option for a commercial let.
The third thing being a nuisance to those living in neighbouring properties. This doesn’t just mean noise (though that is a major issue) it can also be comings and goings at unsociable hours.
Council or Housing Association Property
Pretty much all of the above applies, and you will almost certainly need to check with your local council or housing association if you are thinking of setting up a business at home. There will undoubtedly be red tape to deal with.
You might want to save yourself time by carefully reading your tenancy agreement before you apply to see if there is any mention of it in there. I suspect they would certainly refuse permission if they thought your business activities would cause issues with neighbours etc.
Insurance
A potential stumbling block is arranging separate insurance because your standard buildings and contents insurance isn’t going to cover it. You will be able to find a legitimate insurance company who specialises in the type of insurance you’ll need via British Insurance Brokers’ Association (BIBA). See their website here.
Council Tax and Business Rates
An added expense you may not have considered is you will need to see if you must pay business rates on the part of your property that is effectively your business premises. Sadly, you still have to pay your council tax on the rest of it.
If you are just putting a desk and a phone in your shed OK but what if you are planning on making substantial alterations to your property. You may need planning permission.
Dependant on the type of business you are running you may need a licence to run it from the council and if you want to have an advertising hoarding outside.
Possible Upsides
If you do just need to work from a desk with a computer then working from home is far cheaper than renting office space. There are also some tax allowances you can claim. Some of the things you can offset include council tax, heat, light, phone lines and broadband. Though you should check with the inland revenue for the latest allowances. Inland revenue website here.
As a selling point having a nice garden office will add value and increase the saleability of your home, and it is cheaper than an extension or buying a bigger house.
How is a business defined as such?
You are effectively running a business if you do one or more of the following. You are responsible for its success or failure, you have clients/customers, hire staff to help you, charge for your services or sell goods to make money.
Even if you do all your business activity online it is still a business in the eyes of the law. (A high street shop and an online shop are no different in this regard)
Why run a business from your shed?
In my opinion a shed is a great place to set up a SME. It can be unobtrusive and where mine is positioned none of my neighbours even know it’s there. It is like a little oasis that I can escape to and I can get on with work and feel I really am at work.
All to often when I used to have my desk in the house, I was interrupted but the family know that when I “go to work” I really am at work. Having to go out to the shed may be the shortest commute I’ve ever had but it still creates that all important line of demarcation between home and work.
I’ve been self-employed for many years and at one point my desk was in the living room so I’d never really stop working. Even when I’d cooked the kids evening meal I’d be sat at my desk while everyone else was watching TV.
When you work from home some have problems starting work and are not very productive thinking, “I’ll just watch homes under the hammer and then I’ll start work”, or “I’ll just pop to the shops and then start work afterwards”. Others like me starting work isn’t the problem my problem was stopping work! I would do ridiculously long days.
Since I’ve had the shed office I now switch off the computer when it’s time for the evening meal, and that is me finished until the next morning. It has changed my life and I feel so much more relaxed. I actually think it has improved my productivity doing less hours than I used to.
For me I just have my desk, a filing cabinet, my laptop and a few bits and bobs. For others depending on their business, they may have all sorts, but a shed can cater to so many different businesses as they are so versatile.
Real live business operating from a shed
So there are many gazillions of Bloggers throughout the world and some of them like me run their business from a shed. The example below is a lady called Monica Lucy.
Monica has had her office in a shed in the garden for over three years now, though it looks a bit too posh to call it a shed!
A cabin is a more accurate description and it really puts mine to shame. Mine really is a shed, and when opening the door to mine you’d expect it to be full of plant pots and tools.
Monica’s on the other hand looks amazing. It incorporates a really nice decked area and lovely furniture. See below.
Monica describes it as her “happy place” and loves to be in the “office” with the birds chirping as it feels such a relaxed environment. Monica is successful and blogging is her full time career. If you’d like to read more about the building of the cabin and where she got it from visit her blog here.
Working from a shed is the future.
Most businesses run from a shed are sole traders, and with people losing their “employee” jobs through COVID-19 shutdowns, the number of people setting up a business of their own is only going to increase.
If you are thinking of becoming part of this booming cottage industry then I would recommend you take the plunge and start running a business from home.
So, can I run a business from my shed?
Yes of course you can. Just think carefully about what the likely impact will be on your home life and that of your neighbours and check with your mortgage provider or landlord. There are perhaps more things to consider than you first realised but please don’t let that put you off.
I strongly advocate setting up your business in the garden away from the house. I wish you well with your business venture.
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