Home Working and Your Local Council
When you take the decision to work from home there are several things you need to bear in mind and one of them is your local council.In some ways working for a company in an office represents a cushion, dividing you from non-core issues like rates and tax.Obviously with that cushion gone there’s no point in putting your head in the sand and hoping the issue will go away. The last thing any freelancer or home office worker needs is to suddenly get a large bill for backdated business rates!
Getting organisedPerhaps top of the list is to get organized and get in contact with your local council rates department. In very simple terms you need to know that the room you use as an office, or the rooms, may be liable to business rates, although the rest of the house will stay liable to council tax. That sounds like bad news, although in some cases the net bill gets brought down significantly via mechanisms like small business rates relief.
That said Local Councils aren’t ogres. They are very keen to stress that each case is taken on its merits and, ultimately the decision lies with the Valuation Office Agency. Because situations differ so widely they will normally want to make a site visit and talk to you about how often the room or rooms get used for business purposes and whether you’ve made any alterations to the property in order to facilitate non-domestic use.
Don’t panic!That doesn’t mean they will inevitably classify as much of the property as possible for business rates. If, for example, you have an office, but the front room is occasionally used as a waiting area, or for sitting with clients for a chat the guidance will be only to classify the office room. On the other hand if you convert a garage into an office then it’s fairly clear cut and that whole floorspace will get banded for business rates.
Sometimes you will find that your valuation Officer takes the view that you needn’t be classified for business rates at all. If you have a desk and computer at home, but travel a good deal and simply use your equipment when you happen to be there then the guidelines will be to leave the classification as a domestic property.
Be fairIt’s well worth discussing the situation with your accountant, too. If you have set up as a limited company then obviously you can charge your company rent for the office space you are providing it with, and reclaim broadband, phone bills some light and heat etc but it’s important to do so proportionately.
In the end that’s the key word for business rates, too. If you are sensible and open with the Local Council you can expect to be treated very fairly. In the unhappy event that this doesn’t seem to you to be the case there is a well organized appeals procedure that gives you the chance to make your case.
So don’t stick your head in the sand, make a call to find out where you stand and benefit from the peace of mind it gives you.