Take in a lodger... official MoneySavingExpert.com discussion

Former_MSE_Lawrence
Former_MSE_Lawrence Posts: 975 Forumite
edited 15 March 2011 at 3:53PM in Boost your income
This is a special discussion as part of the guide to

The ‘rent a room’ scheme means you can take in a lodger to live in a furnished room in your home, and it has a special exemption meaning you won’t have to pay tax on the first £4,250 you make each year.

This is a huge tax break for most people and really ups the gain. Better still, as a landlord you’ll be expected to ask for a deposit and a month in advance, which means ready cash comes in quickly.

How much? You can take home £4, 250 without paying a penny in tax; if you've a desirable property and don't mind paying income tax on anything above this, you could easily add another £1,000.

Find out more: Read the Govt info on rent a room.
The "Take a Lodger" Great Hunt

I want to tap MoneySavers for their tips on finding the perfect lodger, dealing with deposits and being a good landlord. Where should you advertise? What do you need to provide, eg, duvets, food etc?

Please feel free to add your comments, suggestions or questions
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Comments

  • Murrell
    Murrell Posts: 520 Forumite
    Please note that most insurance companies won't touch you if you have a lodger and will exclude the lodgers room from the insurance.

    Thanks
    Sandra
  • sec79
    sec79 Posts: 343
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    I have rented out my spare room to lodgers, and yes some companies won't isure you, but quite a few will. You charge the lodger a bond to cover any breakages etc. Their stuff is not covered but they can always take out insurance fir their items. You are not covered for accidental damage, that is the only downside.

    I let the insurance company know when I have a lodger, the premium does not change.

    I'm with Norwich Union, and have been with other insurance firms whilst having a lodger.
  • Bogof_Babe
    Bogof_Babe Posts: 10,803 Forumite
    If someone takes in a student for example, under the rent-a-room scheme, I believe you can only charge up to something like £84 a week without incurring tax liability.

    Two questions: (1) Could you have two students, if you had two rooms, for £42 each, or is the scheme restricted to one lodger only? (2) If you feed them, are you allowed to charge extra for that?

    I'm not thinking of doing it myself at the moment, but if ever I was left on my own it is something I might consider.
    :D I haven't bogged off yet, and I ain't no babe :D

  • Browntoa
    Browntoa Posts: 49,287
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    as many people as you like up to the tax threshold
    I'm a Forum Ambassador and I support the Forum Team on the Shopping and Freebies, Phones and TV and Over 50s boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing . All views are my own and not the official line of MoneySavingExpert.
  • jessicamb
    jessicamb Posts: 10,446
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    I think the feeding part might be taxable income on any profits made
    The early bird gets the worm but the second mouse gets the cheese :cool:
  • Bogof_Babe
    Bogof_Babe Posts: 10,803 Forumite
    jessicamb wrote: »
    I think the feeding part might be taxable income on any profits made

    Makes me wonder how on earth they could prove it though :confused: .
    :D I haven't bogged off yet, and I ain't no babe :D

  • Browntoa
    Browntoa Posts: 49,287
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    I wonder if they trawl the electoral roll ?? or council tax returns

    I've got one lodger but does not take me near the limit

    I'm sure the tax free part excludes bills etc
    I'm a Forum Ambassador and I support the Forum Team on the Shopping and Freebies, Phones and TV and Over 50s boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing . All views are my own and not the official line of MoneySavingExpert.
  • Bogof_Babe
    Bogof_Babe Posts: 10,803 Forumite
    That's a point. If you are living alone you get 25% Council Tax discount, which you would lose on taking a lodger. That would eat well into any profit.
    :D I haven't bogged off yet, and I ain't no babe :D

  • Browntoa
    Browntoa Posts: 49,287
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    I charge that as a seperate amount, but only charge them the 25% each year so i don't lose out, if you had 2 lodgers then split it between them ??

    I charge phone calls, gas , electricity as seperate from "rent"

    they cook/buy their own food, I have the space so they also have their own lounge/bathroom so they are not in my face all the time
    I'm a Forum Ambassador and I support the Forum Team on the Shopping and Freebies, Phones and TV and Over 50s boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing . All views are my own and not the official line of MoneySavingExpert.
  • I'm a lodger, the relationship with my landlord is very much no questions asked, I pay him I stay in the room. I don't say nothing to noone nor does he. According to the council I'm still at my old address (I have contacts :D) and thats how it will stay while I'm here.

    One piece of advice is make the rent all inclusive as if I was offered a room with all separate bills I would run a mile considering I could find a room tomorrow if I liked. (again more contacts:D) Just take a deposit before moving in.
    From my experience let the lodger buy his/her own food, give them a cupboard, shelve or 2 in the fridge and a shelve in the freezer and lay down the rules straight away to avoid tension at a later date.

    Also bar students most lodgers will have troubled lives from my experience but normally nice enough people.
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