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Unlocking the Potential of Home Business Britain

At the heart of the UK’s record-breaking business population, more and more people are choosing to start and run a business from home.

14th November 2016

By Mike Cherry
National Chairman, Federation of Small Businesses

It is not hard to see why the home business sector is on the rise: it has never been easier to start a business nor, with the rise of digital platforms and technology, to find and reach customers. Moreover, with the costs saved on commuting, office rental and business rates, running a business from home makes financial sense for an increasing number of people looking to maximise their skills as a sole trader or small business owner.

running a business from home makes financial sense for an increasing number of people

Home-based businesses are a major economic contributor for the UK and they are an employment creator, including for those who benefit from the extra flexibility of working from home. The proportion of women-led businesses is higher amongst home-based businesses than the small business population as a whole, helping unlock some of the significant untapped potential that exists for a higher level of female entrepreneurship.

Home businesses matter and their importance will only grow over time as numbers increase. Yet barriers to their success remain and there is more than can be done to support home-based businesses, building on the positive moves Government has already made. In recent years, we have seen updated guidance that makes it easier for people to run a business from a rented home, and clarification that home businesses should generally not be subject to planning permission or business rates.

Now we believe there are three areas in which Government can go further in supporting home-based businesses. The first relates to improving digital connectivity, so important to the success of all businesses in today’s market. Government promises that have been made, including for fibre-optic broadband to be installed as standard in new housing developments, and a Universal Service Obligation giving people the right to request a decent and affordable broadband connection, now need to be followed through.

There is also work to do on awareness, with FSB research from 2015 finding that only 36% of small businesses were aware of the availability of superfast broadband in their area.

Tax simplification is the second area in which home-based businesses can be better supported. FSB has already been working with Government to stop plans that would have moved many home-based businesses with modest turnovers onto mandatory quarterly tax reporting, and there is more to do to design a tax system that works for the self-employed. In particular, those running home businesses as self-employed sole traders face unlimited liability, with personal assets, including their home, at risk. Reducing some of this liability should be a priority as part of a tax system that supports small business.

consideration needs to be given to the wider business support environment for home-based businesses

Finally, consideration needs to be given to the wider business support environment for home-based businesses. For people running a business from home, access to support networks, mentoring and advice can be one of the most important things. Shared workspaces are an important part of this, yet are currently heavily concentrated in areas such as London, Manchester and Brighton. Government could intervene by cutting business rates that form a significant part of the operating costs of many of these spaces, thereby encouraging their proliferation across all the regions of the UK.

In summary, home-based businesses play a significant and growing role in the UK’s thriving small business community. Now there is more that needs to be done to support them, to unlock the full potential of home-based businesses for the economy as a whole.

Top tip:
For people running a business from home, access to support networks, mentoring and advice can be one of the most important things

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