Of these ‘home businesses’, 5.2 million (65 per cent) are buying items specifically to resell on at a profit, while 2.8 million sell home-made products such as greeting cards, soaps and eBooks, according to a study by Direct Line for Business (DL4B).
DL4B has termed these companies ‘home webtailers’ – retail operations selling goods direct from home using the internet.
The research also reveals that three in four (74 per cent) home businesses keep all their stock at home with an average value totalling £4,388.
Analysis of trades shows that a large number of online sales operations run by private individuals are good-sized businesses, with the top 5 per cent 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 20134, 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 says that 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.’
The research also reveals that when asked about how these online home businesses prioritise key actions when they first began selling items, sorting tax arrangements and organising insurance rank 6th and 8th.
The top priorities are buying more stock, setting sales targets and devising a business plan.