This Content Was Last Updated on April 5, 2023 by Jessica Garbett
Running a studio at home is attractive, to save rent, create a controlled ambience, save travel, and have a better quality of life as a teacher. However do consider loss of privacy and work/life balance as well.
There are various things to think about, and we touch on some of these below. This page covers use of home for a studio including regular classes. For use as an office and occasional private clients, see Office at Home Expenses
Planning Permission for Business Use
Whether you need planning consent depends on the scale of what you do. Use of your home for business, including a room in the home or a outbuilding, is permitted without Planning Permission if the character of the property isn’t changed. More extensive use may require Planning Permission.
This is highly subjective and different Council Planning Departments, indeed officers within them, may interpret this differently; there are some stories of quite harsh treatment. One test is to ask if someone parked outside would notice the business use, and the answer here will be different in a low density rural setting versus a high density urban one. Impact on the neighbourhood, including visitors to your home and parking, is also relevant.
In practical terms one or two students a week will probably never be an issue, whereas several full classes maybe. Relationship with your neighbours can tip this one way or the other.
The rules are not definitive, but for the most part work on a common sense basis.
There is some useful official guidance on Planning Portal which says:
- You do not necessarily need planning permission to work from home. The key test is whether the overall character of the dwelling will change as a result of the business. If the answer to any of the following questions is ‘yes’, then permission will probably be needed:
- Will your home no longer be used mainly as a private residence?
- Will your business result in a marked rise in traffic or people calling?
- Will your business involve any activities unusual in a residential area?
- Will your business disturb your neighbours at unreasonable hours or create other forms of nuisance such as noise or smells?
- Whatever business you carry out from your home, whether it involves using part of it as a bed-sit or for ‘bed and breakfast’ accommodation, using a room as your personal office, providing a childminding service, for hairdressing, dressmaking or music teaching, or using buildings in the garden for repairing cars or storing goods connected with a business – the key test is: is it still mainly a home or has it become business premises?
- If you are in doubt you may apply to your council for a Certificate of Lawful Use for the proposed activity, to confirm it is not a change of use and still the lawful use.
Constructing an Outbuilding
Planning wise this is often possible under “Permitted Development Rights” – search further online abut these. Generally Permitted Development Rights only apply to a Building for residential use, so there will need to be a two stepped test:
- Does your proposed building comes within Permitted Development Rights,
- Does the proposed use need planning consent under the rules above
Tax Relief for building an outbuilding:
- There is normally no tax relief on the construction of an outbuilding – HMRC Structures and Buildings Allowance doesn’t apply to “any structure located in the grounds of a residence”
- Some fit out costs will be eligible for Capital Allowances, eg
- Contents like furniture and props will be allowable via Capital Allowances
Lessor / Mortgagor Permission
Again this depends on the scale of what you are doing, but you may need consent from your landlord or mortgage company.
In most cases these are not an issue – with using a room in your home or a outbuilding – especially if the space has non exclusive business use, eg a room in home, or an outbuilding, that is also used for domestic or private use inducing, of course, your own personal/family yoga practice – and most home based spaces will fall into this exemption.
Business Rates may be a concern is if you have a more substantial operation, eg exclusive home studio space running for many hours a day, or a separate outbuilding – and then planning would probably be in contention as well.
A separate building may be assessed for Business Rates, but the charge is nil if the ratable value of the building is below £12,000 that would exempt all but the largest home studios in any event. To get an idea of ratable values locally to you, look on the Valuation Office Website for similar sized properties to yours and/or nearby businesses.
It should be possible to extend your home insurance for “home working”, to include public liability and business contents, but there is a marked variation between insurers, so be prepared to shop around .
You will still need your teachers liability insurance to cover risks to students.
Capital Gains Tax
Your main home is normally exempt from Capital Gains Tax (CGT) on sale. Non exclusive business use of an area will not change this.
Exclusive use of an area, room or outbuilding, for business might render that area liable for CGT, depending on amounts and circumstances. Its normally advisable to make sure that any business area also has a private use – including private or family yoga practice. Even if an area or outbuilding comes into CGT, it won’t change the exemption on the rest of your home, so any tax charge will be quite minimal and probably lost in the overall costs of a house move.
The running costs of your home studio space can be claimed against tax. This would include apportioned insurance costs, utility bills and repairs, but generally not Council Tax. if your home is rented a proportion may be deductible, deducting a proportion of mortgage interest is also possible in principle. Where expenses need to be apportioned reasonableness based on hours of use or number of rooms is normally the preferred route, so long as it is sensible, fair and defensible in event of a tax enquiry.
See our guidance on Home as Office Expenses – although a home based studio will need a more nuanced approach.
Setting Up Costs
Adapting a home studio space is capital expenditure can cannot be claimed against tax, by deduction or Capital Allowances.
Capital Allowances are available to give a tax deduction for fitting out costs such as props and furniture, and some electrical / plumbing / heating aspects.