Beginning to work from home

This article by Andrew Bibby, in a slightly different form, was first published in Choice, 2002

For a growing number of people, home isn’t only where the heart is — it’s where the office is, too. There has been a steady climb year by year in the number of Britons who are working from their homes, in many cases taking advantage of new technology like email and the internet to ‘telework’. They include many people who have launched their own businesses as an alternative to early retirement.

But there’s more to successful home-working than pulling up a chair and plugging the PC into the phone line. Andrew Bibby looks at the issues which must be got right.

There was a delightful idea being peddled by the newspaper pundits ten years or so ago at the time when home computers were first becoming widely available. We would all soon have the opportunity, we were told, to move to the more remote corners of the British Isles, enabled by the emerging technologies to work and live, say, on a Scottish island or beside a Cornish beach.

Orkney can indeed seem more attractive than Hackney to a jaded city worker. On the other hand, the idea of moving to a new area — however beautiful the view from the study window — may not be the first thing to consider if you are about to begin home-working, and particularly if you are planning at the same time to launch a start-up business. As with any other major change in life, there’s a lot to get right — and a lot of advantages of having familiar surroundings.

Anyone thinking of becoming a homeworker has to consider a number of legal, financial and technical issues (see box), but the personal and psychological implications of turning your home into your workplace are probably even more important to success.

Needless to say, it’s particularly important to discuss your plans with your spouse or partner. Just as retirement can be a challenging time for relationships if it means that both partners find themselves at home all day, so too a decision to work from home can bring similar tensions. Indeed, in some respects, these problems are harder to adjust to than those of traditional retirement. Most people who work successfully from home will say that, to be effective, they have to shut out normal domestic distractions and focus on the job in hand. But, if this is to be possible, their partners and other family members also need to understand this. The vacuuming or the gardening may be waiting to be done — but tasks like these will have to wait their turn until ‘work’ has ended and ‘home life’ can be recommenced.

Keeping a good work/life balance is the secret of working from home, and it isn’t always easy. Some people find that their work floods over into every part of their personal life: business emails are read and replied to on Sunday evenings, for example, or work documentation crowds every available surface. TV business guru Sir John Harvey-Jones once described how he was unable to stop himself from rushing to the home fax machine every time he heard a new message arriving. Conversely, some people find it impossible to concentrate on work because of all the everyday domestic things all around, crying out to be done first.

Creating barriers between work and home life is a good survival mechanism, therefore, and these barriers can be both those of space and of time. Not many people go as far as the IT expert who put on his business suit each day, let himself out the front door, walked round the side of the house and came in again by the back door because it helped, he said, to separate his home life from his work life. On the other hand, it does seem sensible to ensure that you do have sufficient space to keep your work separate from home life. If possible, try to have a self-contained study or spare room which can be closed off after hours. Working on the dining room table is a bad idea for ergonomic reasons (see below), but also because of the tidying-up necessary every time you have a dinner party!

The legal niceties

A move to start working from home may involve rearranging the furniture but is unlikely to require much in the way of formalities. However it is sensible to be aware of the key issues.

• Planning permission. The government says that planning permission for part-business use "is not normally required where the use of part of the dwellinghouse for business purposes does not change the overall character of the property’s use as a single dwelling" (Planning Policy Guideline 4). You could begin to encounter problems if your business results in much more traffic to your house, if you disturb neighbours unreasonably or if your work generally involves activities which are unusual in a residential area. In other words, a smelly chutney-making concern in the kitchen or a car repairing business on the front lawn might be problematic. Try to keep in with the neighbours: a home-based business in Surrey reconditioning second-hand computers had to relocate after residents nearby complained to the council’s planning officers.

• Business rates. You could be liable for business rates if an area of your house is dedicated exclusively to work: if, let’s say, you were to give over your garage to stocks of maturing goats’ cheeses. However, business rates should not be a problem where the work use of any area of your home is subsidiary to the domestic use. In practice (as with planning issues), rating officers are unlikely to call unless they have their attention specifically drawn to what you are doing.

• Legal restrictions on working from home. You may need to check with your mortgage lender (if you have a mortgage) or landlord (if you are renting) that they have no objection to your plans. Unusually, some houses have restrictive covenants written in which prevent certain activities being carried out.

• Electricity and gas. The Telework Association has encountered a small number of occasions when utility companies attempt to charge business tariffs for electricity or gas supplies. This should be resisted. The Telework Association may be able to help.

• Insurance. In many instances, standard household contents insurance policies do not cover equipment used for business purposes. Indeed, you may even risk invalidating your whole policy if you fail to disclose to your insurer that you are working from home. A number of brokers have specialist insurance packages for home-based workers (one of the market leaders is Tolson Messenger). However, the cheapest route is to try to insure your work equipment through an ordinary household policy. If your own insurer is reluctant to help, shop around.

• Capital gains tax. Generally, no CGT liability arises when you come to sell the home where you live. Accountants have traditionally liked to point out that if part of the building has been used exclusively for work, then you could lose the CGT exemption on that part of the house. In practice, however, this problem is more theoretical than real for most people, not least because there are significant CGT annual exemption provisions which take many people out of the CGT trap. Full relief is in any case normally available if the work area of your home has also been used for domestic use.

• Setting expenses against tax. If you are running your own business from home, you can apportion an appropriate proportion of your home expenses as legitimate work expenses and set them against income tax. This applies to such things as heating, lighting, insurance, maintenance and phone charges. It may also be possible to apportion a part of your council tax payment. This is an area where a good accountant may be able to save you money.

Thinking about equipping your home office

Furniture manufacturers have spotted a new market opportunity. As well as fitted kitchens and bespoke bathrooms, we are now increasingly being tempted with offers for smart new home offices.

You can, if you choose, spend thousands of pounds equipping yourself with the furniture you need to work from home. However lavish expenditure is not necessary. What is important is that you get the basics right, and the first thing to think about is the office desk and chair.

An adequate office chair is essential for your long-term physical well-being, particularly if you will be sitting at a desk for long periods and using a keyboard. Both the height and the back rest should be adjustable, and the chair should have five legs to ensure it is stable. Use a foot rest if necessary, and don’t be tempted to make do with an ordinary upright dining chair.

Check that the desk you are using is appropriate, too. For PC use, the height of the surface of the desk should be about 690 cms, so that the home row of the keys is about 720 cms off the floor. Just as important is to ensure that the desk is deep enough for the computer monitor to be placed straight ahead of you. Squashing in a PC on to a small table or desk or placing the monitor at an angle can cause neck and arm aches. The big risk of frequent use of a keyboard is repetitive strain injury (a form of carpal tunnel syndrome), a potentially very painful condition which can best be avoided by ensuring you have equipment positioned in an ergonomically appropriate way.

These issues, and other potential health hazards for the home-based worker, are covered in an informative free booklet Homeworking, produced by the government’s Health and Safety Executive. This can be downloaded (PDF format) or ordered by phone from 01787 881165.

If you are self-employed, equipment which you purchase for business use at home is eligible for tax relief, under the capital allowances rules. For small businesses, IT equipment purchases are currently eligible for 100% first year relief (in other words, the whole cost can be set against tax in the first year). Other capital purchases are currently eligible for an enhanced (40%) first year capital allowance.

You should compile a comprehensive record of any existing personal property which you are now using for work, preferably with an assessment of the current value of each, since these may also be eligible for some tax relief. This is an area where a competent accountant may be able to advise you.

Most home-based workers choose to install a second, work-only, telephone line and use the existing phone simply for personal calls. This means that work calls don’t get answered when you are trying to relax. It also makes it easier to assess the cost of your business usage for tax purposes. BT and other telecoms companies offer a number of additional services, which may be worth considering carefully. These include call redirect (for example, to a mobile number) and call minder (voicemail) options. For major internet usage or data communication, ADSL services offer high bandwidth and fast transmission times, and may be available from BT, cable or other telecoms operators.

If you are tempted by the idea of rural home-working, bear in mind that more remote areas may have poor mobile telephone coverage and no access to broadband services. If you are very unlucky, you could find that your standard BT line uses technology called line-concentration and is adequate only for speech, not data transfer; the Telework Association has reported that this was a problem for one of its members living in an isolated area of Cornwall.

Ten tips for survival as a home worker

To summarise, here are Choice’s top tips for home working

1. Have a separate room for work. At the day’s end, close the door! Even better, get a lock.
2. Work regular hours. Don’t allow work to spill over into your leisure time.
3. Get a decent office desk and chair. Your health depends on a good posture at work
4. Take regular exercise. The pounds can be added all too easily if you spend all day sitting down.
5. Install a second telephone line for work calls, with an adequate answering machine. Don’t let visiting children (however helpful) answer this phone.
6. Tell your insurer if you’re working from home. Your insurance may otherwise be invalidated.
7. Don’t be afraid to explain to neighbours and friends who call that you are at work. Rather than inviting them in, try to agree an evening or weekend time when you can meet up.
8. Don’t miss out on the chances to develop your work-life. This may mean taking time out regularly for training, to update your skills.
9. Consider meeting up regularly with other local home-based workers. Informal networking groups operate in some towns.

10. Don’t get stuck in a rut. Schedule in time away from home, for work visits, conferences, etc. Remind people you’re still around!

Case study

David Foy began working from his home in St Helens last September (2001), a step which he describes tongue-in-cheek as not so much taking the plunge as jumping off a cliff. Now in his early 50s, David has a background in electronics and computing, and had previously worked for an international mechanical engineering company for almost thirteen years. But the time had come, he decided, for a change. "In June last year I had just come back from six weeks at the company’s head office in Nevada when I realised that I didn’t want to do it any more," he says. Instead, he decided to become self-employed, earning his leaving partly by creative writing, partly by freelance journalism and partly by web design.

Now, after more than six months, he is able to assess both the benefits and disadvantages of the move. "I still have ‘oh-dear-what-have-I-done’ moments, but they’re getting fewer and fewer," he says. "I’m looking long-term. I want to do things I enjoy doing."

A non-driver, David was previously travelling about eighteen miles a day to and from work, using a combination of bus journeys and lifts. One advantage of working from home, he says, is being able to hear the rain battering against the windows and knowing that he doesn’t need to go outside and get wet. Instead, his commute is simply to the corner of the living room in his flat, where he has his PC, printer and scanner set up. He says that he already had almost all the equipment he needed for his work, and his only major acquisition was an extra bookcase.

David lives alone, which in terms of working from home has, he says, some disadvantages but also significant benefits. He has disciplined himself into establishing a work routine, based on working eight hours a day, Monday to Friday. An Excel spreadsheet records the total time he is spending at work, and also how much time is being spent on each particular work project. He admits however that it is easy to become sidetracked, and says that he has recently become distracted into spending time sorting out his email arrangements — necessary work, perhaps, but not productive in terms of income generation. He confesses that another morning saw him spending forty minutes searching the B&Q website for a bathroom cabinet!

On the other hand, if the set forty hours have already been done by Friday lunchtime, David is quite prepared to give himself time off on Friday afternoons. In this respect, he is replicating the routine he followed in his previous job, when Fridays were often a time for a lunchtime pint with work colleagues.

So how in general would he sum up his first few months of home-working? David admits that the move to self-employed has turned out to be more difficult to adjust to than he anticipated, and that he has slipped a month or so behind in terms of his planned work schedules. "While working my notice, I thought that I had covered all the angles and that the transition would be relatively smooth: not so. Everything has gone so much more slowly that I had planned," he says. But he remains confident of the eventual success of his move. "I don’t regret making the change," he says.