Working from home has a myriad of advantages over office work - here's the main costs involved in setting up.

By Jenny Byrne, mother and former editor of a Parenting Magazine.

25% of the workforce now work at least one day per week from home.

Technology has made this revolution in work a particularly attractive prospect for many, especially fed-up commuters or those eschewing the nine to five existence. But exactly what does it cost if you want to work from home?

The computer

"Remember many capital purchases like computers, printers, faxes, office furniture and other hardware are tax deductable."

Unless you're working for a company which will supply a PC, a computer will be one of the first pieces of equipment you'll need.

Typically, the average PC is around £600 including VAT, has 3GHz, DVD/CDRW drive and a 15" monitor. A combined printer/scanner/copier is a further £100. However you may find that reading computer consumer magazines such as Personal Computer World may point you in the direction of cheaper deals.

If you already have a mouse, keyboard and monitor you're happy with, the price of the basic PC will drop even further. Obviously the more you spend the greater the memory and function capacity.

Remember many capital purchases like computers, printers, faxes, office furniture and other hardware are tax deductable, provided they're directly related to earning your income.

The internet

To get started, you'll need to choose an internet service provider (ISP), taking into consideration: price, speed of connection, reliability, multiple email addresses, webspace, price and performance. The jargon that surrounds ISP's can be confusing, particularly following the introduction of modern broadband technologies.

The most prevalent broadband technology in the UK is ADSL and this is the best place to start when considering a higher speed service. Unlike satellite, cable or wireless, ADSL transmits over an existing copper wire based phone line, splitting a single line into two separate parts, voice and data. This allows users to both speak and surf at the same time.

Every provider offering ASDL services will also operate a coverage/availability checker to confirm whether a building is suitable for broadband via input of a phone number or postcode.

You now need to decide how much your connection will be used. Typically you can choose one of the many 'unlimited' services, but do check the Terms & Conditions as some ISPs hide a Fair Usage policy away in the details. Just remember, the less you pay, the less you get.

Income protection insurance

As a self employed person you won't be entitled to sick, maternity or holiday pay, so it's a good idea to take out insurance which offers a financial buffer in the event of you falling sick or having an accident.

But as a general rule, a policy will start paying out 13 weeks after work has stopped. However with some policies it's longer and others it's less - you dictate the length of time and this is reflected in the premium. Most policies pay between 50 & 65% of gross income for the previous 12 months and will continue paying until you recover or turn 60 - whichever comes first.

Tax and National Insurance

You'll have to pay your own tax and National Insurance, and let the Inland Revenue and the DSS know that you're starting your own business or becoming self employed. For more on this, see our archived feature entitled Paying your own Tax and NI.

After starting to keep regular records of income and expenditure, you'll need to find an accountant whose job it is to reduce your tax bill. For example if you work from home in a room dedicated to your work and it's one of five reception rooms, then you can claim one fifth of your mortgage as a tax deduction. A different portion of your fuel and phone bills is also tax deductable.

VAT

If you've earned more than £61,000 in the previous 12 months or you think you might earn that in the next 12 months, then you'll need to register for VAT with the local customs and excise office, or by downloading form VAT1 from the HM Revenue and Customs website.

So is it worth it?