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8 million people in the UK operate an ‘online business from home’

15th April 2013 Print

One in six (17%) people in the UK (or eight million) are operating as an ‘online business from home', specifically purchasing goods to resell, or making their own products to sell for profit, according to research from Direct Line for Business ("DL4B").

The research revealed that of these ‘home businesses',  5.2 million (65 %) are buying items specifically to resell on at a profit, while 2.8 sell home made products such as greeting cards, soaps and eBooks. DL4B has termed these companies ‘home webtailers'- retail operations selling goods direct from home using the internet. 
The research also revealed that three in four (74%) home businesses keep all their stock at home with an average value totalling £4,388, a risky proposition given in the last year there were 653,000 burglaries in England and Wales.  Many of these businesses would not be covered by standard home insurance policies, requiring specialist business insurance, as these goods to not constitute standard home contents. 
Analysis3 of trades on a leading online auction site showed that a large number of online sales operations run by private individuals are actually sizable businesses, with the top 5% of private sellers generating an annual turnover of a very healthy £18,094. With the new personal income tax threshold of £9,440 now in place as of the 6th April 2013, DL4B believes that a significant number of people selling products online will be unaware that their activities online mean they are actually running a business from home.  Those operating a business from home on top of other employment may need to pay tax on all turnover generated through online sales.
Jazz Gakhal, Head of Direct Line for Business commented: "A large proportion of people clearly don't view themselves as running a business, despite generating a sizeable turnover selling goods online to be dispatched from their home.  People should check with HMRC if there activities online mean they qualify as running a business.  Stock stored at a home will not be covered by a standard home insurance policy, so people are putting themselves at financial risk.  Indeed for those people transporting goods to and from home, insurance is also required to avoid damage in transit.
"We urge people looking to make or sell items from home on a regular basis to organise home business insurance from the start."
The research also revealed that when asked about how these online home businesses prioritised key actions when they first began selling items, sorting tax arrangements and organising insurance ranked 6th and 8th.
Priorities for those operating online businesses from home

Ranking - Home Business action

1 Buying more stock
2 Setting sales targets
3 Devising a business plan
4 Making expansion plans
5 Creating a marketing plan
6 Sorting tax arrangements
7 Developing their office layout
8 Organising insurance
9 Looking to recruit