Main site > MoneySavingExpert.com Forums > Essential Money > House Buying, Renting & Selling > MSE News: Call to up tax-free lodger allowance (Page 1)

IMPORTANT! This is MoneySavingExpert's open forum - anyone can post

Please exercise caution & report any spam, illegal, offensive, racist, libellous post to forumteam@moneysavingexpert.com

  • Be nice to all MoneySavers
  • All the best tips go in the MoneySavingExpert weekly email

    Plus all the new guides, deals & loopholes

  • No spam/referral links
or Login with Facebook
MSE News: Call to up tax-free lodger allowance
Closed Thread
Views: 2,279
Thread Tools Search this Thread Display Modes
# 1
MSE Guy
Old 10-11-2009, 5:02 PM
MSE News Editor
Serious MoneySaving Fan
 
Join Date: Jan 2009
Posts: 1,620
Default MSE News: Call to up tax-free lodger allowance

This is the discussion thread for the following MSE News Story:

"The Government is being urged to increase the tax-free allowance given to people who rent a room to a lodger as it has remained static for over a decade ..."


MSE Guy is offline
Report Post
# 2
Andy Davies
Old 10-11-2009, 5:05 PM
MoneySaving Convert
 
Join Date: Nov 2005
Posts: 186
Default

Why would be my question...

I'd rather they scrapped the allowance raised the tax free allowance for everyone instead.

Andy
Andy Davies is offline
Report Post
The Following 2 Users Say Thank You to Andy Davies For This Useful Post: Show me >>
# 3
Jowo
Old 10-11-2009, 5:15 PM
Fantastically Fervent MoneySaving Super Fan
 
Join Date: May 2009
Posts: 8,001
Default

The tax free sum for the landlord is equivalent to a rent of about 82 per week or 354 per calendar which probably doesn't cover 90% of rental rates for lodgers in the south east.

As there's a housing shortage due to a significant population increase, you would have thought the government might be incentivised for more householders to take in lodgers.

However, its probably a fiddle for someone to do the tax return for a sum greater than that and that kind of bureaucracy is off putting to the average person.

Perhaps it should just be scrapped for being so fiddly to monitor and manage, and absorbed, as Andy Davies says, into some existing allowance?
Jowo is offline
Report Post
# 4
Chrismaths
Old 10-11-2009, 5:51 PM
Serious MoneySaving Fan
 
Join Date: Feb 2006
Location: Leeds
Posts: 925
Default

It's not designed to be a tax free wheeze for encouraging lodgers - if you claim it you are also excluded from claiming back expenses related to the letting. It's therefore designed to avoid people having to fill in tax returns when they make a small amount of money from letting a room, making expense for both them and HMRC.

What's the point of increasing it?

Full details here: http://www.direct.gov.uk/en/MoneyTax...ome/DG_4017804
I'm an Investment Manager. Any comments I make on this board should be not be construed as advice, and are for general information purposes only.
Chrismaths is offline
Report Post
The Following 2 Users Say Thank You to Chrismaths For This Useful Post: Show me >>
# 5
tbs624
Old 10-11-2009, 6:08 PM
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Feb 2008
Posts: 10,637
Default

The organisers of the campaign want that tax-free allowance upped to 9000 per annum, apparently. Their argument is that it would help prevent repossessions: that's assuming that all those who take in a lodger are struggling with day to day finances.What equivalent subsidy would be available for those don't have the space to take in a lodger?

Let's up everyone's tax free personal allowance to that figure instead.

On Jowo's point, extra lodger capacity is not going to solve a housing shortage - it may help a few singletons but families need affordable long term housing, not a bedroom with little security of tenure..

Even if the campaign is not successful ( and it won't be) it will no doubt generate a boost in business for a particular website
tbs624 is offline
Report Post
# 6
Jowo
Old 10-11-2009, 7:06 PM
Fantastically Fervent MoneySaving Super Fan
 
Join Date: May 2009
Posts: 8,001
Default

Quote:
Originally Posted by tbs624 View Post

On Jowo's point, extra lodger capacity is not going to solve a housing shortage - it may help a few singletons but families need affordable long term housing, not a bedroom with little security of tenure..
There are almost a million lodgers in the UK, according to this estimate, across around approx 25 million existing households.

Lodging is clearly the preserve of the young and those on lower incomes but nonetheless, it still accommodates a fair few.

http://www.telegraph.co.uk/finance/p...recession.html

From this article, it appears its popularity is motivated by the stretched finances of the house-owner, increasing by 20+ % over the last few years, Therefore, it actually doesn't look like the low tax threshold is putting many off.

http://www.net-lettings.co.uk/London...sing-1289.html
Jowo is offline
Report Post
# 7
edgex
Old 10-11-2009, 8:59 PM
Fantastically Fervent MoneySaving Super Fan
 
Join Date: Oct 2008
Location: Birmingham!
Posts: 2,985
Default

Quote:
Originally Posted by Jowo View Post
The tax free sum for the landlord is equivalent to a rent of about 82 per week or 354 per calendar which probably doesn't cover 90% of rental rates for lodgers in the south east.

As there's a housing shortage due to a significant population increase, you would have thought the government might be incentivised for more householders to take in lodgers.

However, its probably a fiddle for someone to do the tax return for a sum greater than that and that kind of bureaucracy is off putting to the average person.

Perhaps it should just be scrapped for being so fiddly to monitor and manage, and absorbed, as Andy Davies says, into some existing allowance?

surely people could only take in a lodger if theyve actually got a room which is suitable to have a lodger in?


& is there really a housing shortage?
or is it down to the right mix of housing not being readily available at decent prices?



which would be better:
an elderly woman in a 3/4 bed house with a lodger, whilst a family with 2 kids are cramped into a 2bed house
or
that woman moving into the 2bed house, & the family occupying the 3/4bed house

she could still have a lodger in the 2bed, if wanted, & that would be 100% efficient usage of the bedrooms
edgex is offline
Report Post
The Following User Says Thank You to edgex For This Useful Post: Show me >>
# 8
Jowo
Old 10-11-2009, 9:08 PM
Fantastically Fervent MoneySaving Super Fan
 
Join Date: May 2009
Posts: 8,001
Default

If a million people are effectively renting a room in a property rather than finding self-contained property, then there are a million less new households to worry about constructing, that's the point I'm making.

There is a signficant increase in population growth and new households (caused by immigration, divorce, people living longer, more people living alone, etc) so its just as well some of this spurt is being accommodated by people with a spare room who ordinarily would have left them empty.

Any campaign putting pressure on the government to increase the tax free limit for lodgers could easily gain headlines if they reminded the govt what would happen if a million landlords were encouraged to serve notice on a million lodgers on the same day and the million lodgers then presented themselves to their local authority housing department as homeless.

Of course, this level of social activism is unlikely to happen but it would make a great symbolic gesture.
Jowo is offline
Report Post
The Following User Says Thank You to Jowo For This Useful Post: Show me >>
# 9
seven-day-weekend
Old 10-11-2009, 11:30 PM
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Jun 2006
Location: HOME! West Midlands, England
Posts: 21,437
Default

Quote:
Originally Posted by tbs624 View Post
The organisers of the campaign want that tax-free allowance upped to 9000 per annum, apparently. Their argument is that it would help prevent repossessions: that's assuming that all those who take in a lodger are struggling with day to day finances.What equivalent subsidy would be available for those don't have the space to take in a lodger?

Let's up everyone's tax free personal allowance to that figure instead.

On Jowo's point, extra lodger capacity is not going to solve a housing shortage - it may help a few singletons but families need affordable long term housing, not a bedroom with little security of tenure..

Even if the campaign is not successful ( and it won't be) it will no doubt generate a boost in business for a particular website
It will help a great many single people on low income who have no choice but to have a room in someone else's house because they can't afford to live any other way as they have only their one wage and no help from the Government like families do.

I think the lodger allowance should be raised to encourage more people to have lodgers.
I am a Job Club Coach in Association with CAP
'I believe in Christianity as I believe that the sun has risen. Not only because I see it, but because I see everything by it': C.S. Lewis
I am a Floating Voter - every party wants to be my friend
seven-day-weekend is online now
Report Post
The Following 2 Users Say Thank You to seven-day-weekend For This Useful Post: Show me >>
# 10
tbs624
Old 11-11-2009, 2:13 AM
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Feb 2008
Posts: 10,637
Default

Quote:
Originally Posted by seven-day-weekend View Post
It will help a great many single people on low income who have no choice but to have a room in someone else's house because they can't afford to live any other way as they have only their one wage and no help from the Government like families do.

I think the lodger allowance should be raised to encourage more people to have lodgers.
(my highlighting) See my previous comment
Quote:
Originally Posted by tbs624 View Post
Let's up everyone's tax free personal allowance to that figure instead.
That would help single people

An increase in the rent a room tax allowance would obviously also help a "great many people" who have bought beyond their means and live in larger properties than they need to: LLs ( whether of tenanted properties or those letting out space in their own home) don't let to others out of altruism, as a public service to the potentially homeless, they do it for their own financial gain Why should only those who have space for lodgers be given a larger tax free allowance?

Last edited by tbs624; 11-11-2009 at 2:30 AM.
tbs624 is offline
Report Post
# 11
puddings
Old 11-11-2009, 9:28 PM
Serious MoneySaving Fan
 
Join Date: Sep 2006
Location: in the gents
Posts: 1,863
Default

Im glad MSE are supporting this campaign.

People that have plenty of money probably wouldn't choose to share their home even if they did have the room. It's people that are skint, like me that do it.

Without my lodgers I would have been reposessed by now. The scheme for tax free income should continue to be encouraged, household bills have shot up loads in the last 12 years, surely its time that the Inland Revenue adjusted the threshold to put the scheme back into the same perspective that it was when first set up.

Write to your MP!

http://spareroom.co.uk/el/69181531/7a809907bba61ba4/rtr
puddings is offline
Report Post
# 12
puddings
Old 11-11-2009, 9:36 PM
Serious MoneySaving Fan
 
Join Date: Sep 2006
Location: in the gents
Posts: 1,863
Default

Quote:
Originally Posted by edgex View Post
which would be better:
an elderly woman in a 3/4 bed house with a lodger, whilst a family with 2 kids are cramped into a 2bed house
or
that woman moving into the 2bed house, & the family occupying the 3/4bed house
The elderly woman is unlikely to want to move house whatever happens. So this way she could stay in her house and get two or three lodgers.
Believe me, there is absolutely no shortage of people wanting to lodge. When I get a vacancy and put an advert in our local paper, I could fill that room twenty times over with the response that it generates.
puddings is offline
Report Post
The Following User Says Thank You to puddings For This Useful Post: Show me >>
# 13
Debt_Free_Chick
Old 11-11-2009, 9:42 PM
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Feb 2004
Location: Beautiful Sussex
Posts: 13,111
Default

If upping the allowance is intended to prevent repossessions, then the expenditure should be targeted at those who need help to prevent repossession. Otherwise, it's the "Maggie Thatcher" argument i.e. those that don't need the allowance get it anyway and those that can will abuse the system to get an allowance they don't need!

I am reminded of this .... "The only thing we learn from history is that we don't learn"!
Warning ..... I'm a peri-menopausal axe-wielding maniac
Debt_Free_Chick is offline
Report Post
# 14
Debt_Free_Chick
Old 11-11-2009, 9:43 PM
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Feb 2004
Location: Beautiful Sussex
Posts: 13,111
Default

Quote:
Originally Posted by puddings View Post
The elderly woman is unlikely to want to move house whatever happens. So this way she could stay in her house and get two or three lodgers.
Yup - and Maggie Thatcher (and others) could live in a twenty bedroomed house and let out one or two just to get the allowance. But is MT in danger of being evicted or repossessed? :confused:
Warning ..... I'm a peri-menopausal axe-wielding maniac
Debt_Free_Chick is offline
Report Post
The Following User Says Thank You to Debt_Free_Chick For This Useful Post: Show me >>
# 15
tbs624
Old 12-11-2009, 8:52 AM
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Feb 2008
Posts: 10,637
Default

Quote:
Originally Posted by puddings View Post
Im glad MSE are supporting this campaign.
MSE is reporting the campaign as a news item and a topic for discussion rather than specifically supporting it AFIAA

Quote:
Originally Posted by puddings View Post
People that have plenty of money probably wouldn't choose to share their home even if they did have the room. It's people that are skint, like me that do it.

Without my lodgers I would have been reposessed by now. The scheme for tax free income should continue to be encouraged, household bills have shot up loads in the last 12 years, surely its time that the Inland Revenue adjusted the threshold to put the scheme back into the same perspective that it was when first set up.
When you take on lodgers you have the option of whether or not you use the RaR scheme. If your bills are particularly high you may be better accounting for room rental income on your tax return in the standard way

Quote:
Originally Posted by puddings View Post
Write to your MP!
Also write if you don't agree with the allowance being hiked to 9 grand

Last edited by tbs624; 12-11-2009 at 8:55 AM.
tbs624 is offline
Report Post
# 16
Gorgeous George
Old 12-11-2009, 10:27 AM
Fantastically Fervent MoneySaving Super Fan
 
Join Date: Mar 2006
Location: ??485285
Posts: 7,787
Default

I let a 4-bedroom property for 5,400 per year and have to pay tax on income. If I moved in and let all the rooms to a lodger, I'd pay no tax.

I'd scrap the allowance or let (single property) BTL LLs to opt out of paying tax too.

GG
There are 10 types of people in this world. Those who understand binary and those that don't.
Gorgeous George is offline
Report Post
Closed Thread

Bookmarks
 
 




Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

 Forum Jump  

Contact Us - MoneySavingExpert.com - Archive - Privacy Statement - Top

Powered by vBulletin® Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.

All times are GMT +1. The time now is 7:46 AM.

 Forum Jump  

Free MoneySaving Email

Top deals: Week of 16 April 2014

Get all this & more in MoneySavingExpert's weekly email full of guides, vouchers and Deals

GET THIS FREE WEEKLY EMAIL Full of deals, guides & it's spam free

Latest News & Blogs

Martin's Twitter Feed

profile
  • RT @MoneySavingExp: Weekly email:Free breaking bad, top shares ISA, HOT bband deal ending, 2.5% cash ISA, Tesco wine sale, £10 champers.. h?
  • RT @MoneySavingExp: Ovivo closure: MSE?s reported the mobile firm to authorities. If you?ve been affected, here?s how you can complain http?
  • Right switching off Twitter now. Going back offline. Thanks to those of both sides tweets for making it a more enjoyable watch.

Cheap Travel Money

Find the best online rate for holiday cash with MSE's TravelMoneyMax.

Find the best online rate for your holiday cash with MoneySavingExpert's TravelMoneyMax.

TuneChecker Top Albums

  • VARIOUS ARTISTSNOW THAT'S WHAT I CALL MUSIC! 87
  • THE VAMPSMEET THE VAMPS (DELUXE VERSION)
  • VARIOUS ARTISTSFROZEN (ORIGINAL MOTION PICTURE SOUNDTRACK)

MSE's Twitter Feed

profile
Always remember anyone can post on the MSE forums, so it can be very different from our opinion.
We use Skimlinks and other affiliated links in some of our boards, for some of our users.