How Much Does It Cost to Start a Home Bakery Business in the UK? (2026)

The essentials for a home bakery business in the UK cost about £170 to £540. Registration with your council is free. My take: the legal side is cheap, so there’s no reason to trade without doing it properly. But don’t confuse cheap paperwork with a cheap business. Ingredients, tins and wasted bakes add up fast, so start with around a grand behind you.

Startup costs breakdown

Not in the table: ingredients, tins, labels and a separate fridge shelf. These depend on what you bake, so price them for your own menu before you set prices.

Rules and registrations you need

Register with your council. Selling food from home makes you a food business. GOV.UK says you must register at least 28 days before you start trading. It’s free. After that, an environmental health officer will usually come and inspect your kitchen.

Your hygiene rating. The inspection gives you a food hygiene rating. Customers check it. A low score on your first visit will hurt sales, so get your kitchen, records and cleaning routine sorted before the officer arrives.

Food safety records. Use the free Safer Food, Better Business pack from the Food Standards Agency. Fill it in and keep it up to date. It’s what the inspector will want to see.

Hygiene training. GOV.UK says food handlers don’t have to hold a food hygiene certificate, but they must be trained or instructed in food hygiene, whether by a course, on the job or self-study. I’d still do the course. It’s the easiest proof for an inspector. A Level 2 Food Hygiene course costs £20 + VAT online and takes about two hours.

Allergen labels. This is the rule people miss. If you pack cakes before the customer orders them (cookies in bags, brownies in boxes for a market stall), that’s “prepacked for direct sale”. Under Natasha’s Law, the label must show the name of the food and a full ingredients list with the 14 allergens emphasised. Made-to-order celebration cakes are different, but you still have to give allergen information. Get this wrong and someone could end up in hospital.

Your home. GOV.UK’s guide to running a business from home says you need permission from your mortgage provider or landlord. Your home insurance may not cover the business either. Major alterations to your home can need planning permission.

Insurance. Get public and products liability, which covers you if someone gets ill from your food. Simply Business says 10% of home bakers paid £60.54 or less a year for up to £2 million of cover in the first half of 2026. Its cake business page shows a part-time cake decorator sole trader example at £66.62 a year.

HMRC. If you earn £1,000 or less from trading in a tax year, the trading allowance means you don’t need to tell HMRC. Go over that and you’ll need to set up as a sole trader and file a Self Assessment return.

Data protection. Taking orders with names and addresses means you most likely need to pay the ICO data protection fee: £52 a year, or £47 by direct debit.

Ongoing monthly costs

Price every cake with the box, the label and your time in it. A lot of home bakers only count the flour and butter, and then work weekends for nothing.

How to start on a small budget

1. Use the kitchen kit you have. Don’t buy a mixer until you’re turning down orders because yours can’t keep up.
2. Do the free stuff first. Council registration and the Safer Food, Better Business pack cost nothing.
3. Start with a short menu. Three or four bakes you do brilliantly. Fewer ingredients to stock, less waste.
4. Sell to businesses, not just birthdays. Cafés, offices and farm shops order every week. A birthday customer orders once a year. B2B beats B2C for steady money.

Mistakes that cost people money

• Selling before you’ve registered. It’s free and takes minutes. There’s no excuse.
• No allergen labels on prepacked bakes. It’s the law, and it’s the mistake that can hurt someone.
• Not telling your mortgage lender, landlord or home insurer. A claim your insurer refuses could cost you far more than the cakes ever earned.
• Starting with nothing in the bank. I tried to start a business with no money and it doesn’t work. Around £1,000 covers ingredients, tins, boxes and a few failed bakes while you build a name.
• Hiring help too early. I brought too many people in too early once, and managing them took all my time. Bake every order yourself first. Write your recipes and processes down. Then train someone.

First steps

1. Ask your mortgage lender or landlord, and tell your home insurer.
2. Register your food business with the council (at least 28 days before you sell).
3. Do a Level 2 Food Hygiene course.
4. Download and fill in the Safer Food, Better Business pack.
5. Get public and products liability insurance.
6. Write ingredient and allergen labels for every bake you’ll prepack.
7. Pay the ICO fee and, once you go over £1,000 a year, set up as a sole trader.
8. Take your first orders from people who’ll tell their friends.

This is a game between you and you. The oven’s already in your kitchen.