Small businesses shift to home working

Chats around the water cooler are becoming a thing of the past for more workers as rising costs and a desire to reduce commuting persuade businesses to abandon traditional offices.

According to new figures from O2, which surveyed 530 small businesses, 50 per cent of companies it contacted do not work in formal offices. Of that 50 per cent, 24 per cent had offices but worked remotely or from home, while 18 per cent had made the transition in the past eight months. The research found that almost two thirds of companies still working from fixed business premises were considering giving them up within the year.

The main reasons behind the shift are the credit crunch, the desire for flexible hours and better technology, according to the survey.

Home offices
If you run your business from home, a proportion of the expenses of the residence used for business, such as an office or workshop, can be deducted from your taxable profits on your self-assessment tax return.

Provided a discrete room or space is for the business, it is usual to calculate the proportion of the house occupied by the business and charge the appropriate percentage of council tax, heating and lighting and so on, to the business. If a shared telephone is used, a proportion of the bill can be charged to the business too.

Beware of CGT
Care must be exercised however to ensure the claim for use of part of the house as an office is proportionate. If you sell the property at some future point HM Revenue and Customs might take the view that the area used as an office should be disallowed from the exemption for capital gains tax (CGT). That means part of any profit on the sale of the house is subject to CGT.

Benefits include:

• more flexibility about the hours you work, allowing you to meet commitments at home, like childcare
• freeing up time and money that might be spent travelling
• helping to reduce stress

Drawbacks include:

• the possibility of feeling isolated
• missing out on office-based learning opportunities
• your employer may insist that you're available at home during normal working hours, so you may lose some of the flexibility which working from home can give
• you may have to sacrifice living space to set up a work station which will satisfy health and safety standards
• your employer is likely to insist that they must inspect your workstation to make sure it's suitable, meaning you'll have to let them into your home

Security risks

Data security may be at risk if you use a personal computer, so your employer may provide you with one.

You will have to make sure that any visitors to your house don’t see any sensitive material you’re working with.