84% of the UK’s smallest businesses now use their home as a place of work, according to new research from Lloyds Bank Insurance.

The latest Big Issues for Small Businesses report from the insurer found that 53% of all microbusinesses were started from home and half of the top 10 working locations identified are within the home, including the living room, dining room and kitchen.

There are now 2.7 million self-employed people working from home in the UK, and the research revealed that 82% of these microbusiness owners have made significant changes to make their property ‘work ready’. The average cost of adapting homes for working life is revealed to be £1,392, with the most popular adjustment converting a room into an office (42%).

The report, which explores the environment in which microbusiness owners and sole traders operate, showed that being able to work from home is the main driver for 49% of those who have chosen to go it alone.

78% enjoy working from home and feel it provides greater flexibility (84%). 64% believe it makes better financial sense, while 57% say it improves productivity.

However, 37% admit they end up working more than they’d like, 23% being expected to do more domestic admin and 36% blaming working from home for making their households messier. 35% even admit that they miss being around others.

The report also highlighted the challenge of domestic business disruption – 17% worry about a family member deleting a digital document, whilst 9% fear paper documents being destroyed by a child.

Accidents in the home-workplace are also common, with 15% having damaged a technology device and one in 10 confessing spilling a drink on a work device.

Despite investing both time and money in making homes work ready, 26% of microbusiness owners and sole traders are unaware that having appropriate insurance can be a legal necessity.

24% didn’t know that running their business from home could invalidate their home insurance.

Damien McGarrigle, head of Business Insurance at Lloyds Bank Insurance, said: “With the help of technology, the way we live and work is evolving with more and more people choosing to combine home and work where possible.

“Whether you work at home or in a premises, it is essential to have the right kind of protection to avoid being exposed to setbacks risking potentially irreversible damage to fledgling businesses.”