Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • InvoluntaryAdult
    • By InvoluntaryAdult 28th Nov 17, 12:42 PM
    • 5Posts
    • 1Thanks
    InvoluntaryAdult
    Council Tax Conundrum
    • #1
    • 28th Nov 17, 12:42 PM
    Council Tax Conundrum 28th Nov 17 at 12:42 PM
    Hi there,
    So I find myself being in an interesting position. I am a full time student and property owner. I have 2 spare rooms and have a couple of lodgers living with me. (I was living there for 8 months before the lodgers moved in).
    The local council have given me a full council tax exemption, and when the lodger first approached me I was under the impression they were both full time students as well. It turns out that one is only a part time student and the other is unemployed, but an aspiring artist.

    Where does that leave me with council tax? Does my exemption still stand? Are the two lodgers obliged to start making contributions.

    I feel my situation is quite unique which is possibly why I haven't found any advice on the internet.

    Many Thanks
Page 1
    • agrinnall
    • By agrinnall 28th Nov 17, 12:54 PM
    • 18,688 Posts
    • 14,407 Thanks
    agrinnall
    • #2
    • 28th Nov 17, 12:54 PM
    • #2
    • 28th Nov 17, 12:54 PM
    I'm not a CT expert but I would say that the property required some CT to be paid from the date the lodgers moved in (could be full CT or could be 25% discount if the part time student qualifies for exemption). And the lodgers are not obliged by the law to pay anything, the CT is in your name and it's you that has to pay it, you would need to alter the rent agreement with your lodger(s) to include a contribution to the CT.

    I very much doubt if your situation is in any way unique.
    • da_rule
    • By da_rule 28th Nov 17, 12:55 PM
    • 2,519 Posts
    • 2,230 Thanks
    da_rule
    • #3
    • 28th Nov 17, 12:55 PM
    • #3
    • 28th Nov 17, 12:55 PM
    https://www.gov.uk/council-tax/who-has-to-pay


    Follow the above link. You won't get the 25% discount as you don't live alone and at least one of the people you live with is classed as an 'adult'.


    You also therefore will not get the 50% discount as at least one person is classed as an 'adult'.


    How you split the bill is a matter for you and your lodgers to decide.


    You will also need to ensure that you tell the local authority so that they can back date any debt for the time that you have been mistakingly claiming an exemption.
    • G_M
    • By G_M 28th Nov 17, 1:00 PM
    • 42,255 Posts
    • 49,060 Thanks
    G_M
    • #4
    • 28th Nov 17, 1:00 PM
    • #4
    • 28th Nov 17, 1:00 PM
    where is the 'conundrum'?

    There are 3 adults living there.

    One (yourself) is a qualifying exempt student. The other 2 are not.

    So full CT is payable.
    • rtho782
    • By rtho782 28th Nov 17, 1:06 PM
    • 1,034 Posts
    • 747 Thanks
    rtho782
    • #5
    • 28th Nov 17, 1:06 PM
    • #5
    • 28th Nov 17, 1:06 PM
    Full CT, you are liable for it as the property owner.

    Only if included in your lodgers agreements can you re-charge it.

    If one of them leaves, you get a 25% single occupier discount as only one non-student is there.
    Deposit Saved since 01/12/15: £13,000 / £15,000 House Bought!

    Debt Cleared since 01/12/15: £6,000 / £7,500
    • CIS
    • By CIS 28th Nov 17, 1:14 PM
    • 10,114 Posts
    • 5,787 Thanks
    CIS
    • #6
    • 28th Nov 17, 1:14 PM
    • #6
    • 28th Nov 17, 1:14 PM
    Providing that the lodgers have their 'sole or main residence' in the property then they are regarded as resident for council tax purposes and they will affect any discount or exemption on the property.

    Is the property their 'sole or main residence' (I'd assume it is ?)

    Craig
    I no longer work in Council Tax Recovery as I'm now a self employed Council Tax advisor and consultant with my own Council Tax consultancy business. My views are my own reading of the law and you should always check with the local authority in question.
    • aneary
    • By aneary 28th Nov 17, 1:23 PM
    • 799 Posts
    • 699 Thanks
    aneary
    • #7
    • 28th Nov 17, 1:23 PM
    • #7
    • 28th Nov 17, 1:23 PM
    https://www.gov.uk/council-tax/who-has-to-pay


    Follow the above link. You won't get the 25% discount as you don't live alone and at least one of the people you live with is classed as an 'adult'.


    You also therefore will not get the 50% discount as at least one person is classed as an 'adult'.


    How you split the bill is a matter for you and your lodgers to decide.


    You will also need to ensure that you tell the local authority so that they can back date any debt for the time that you have been mistakingly claiming an exemption.
    Originally posted by da_rule
    Sorry where does the 50% discount come into it??

    If one of the lodgers is exempt then you still get the 25% discount.
    • 00ec25
    • By 00ec25 28th Nov 17, 1:28 PM
    • 5,554 Posts
    • 4,933 Thanks
    00ec25
    • #8
    • 28th Nov 17, 1:28 PM
    • #8
    • 28th Nov 17, 1:28 PM
    Where does that leave me with council tax? Does my exemption still stand? Are the two lodgers obliged to start making contributions.

    I feel my situation is quite unique which is possibly why I haven't found any advice on the internet.

    Many Thanks
    Originally posted by InvoluntaryAdult
    Unique it is not, it is even so common it is explained in the 4th topic
    https://www.citizensadvice.org.uk/housing/renting-a-home/student-housing/students-in-private-rented-accommodation/student-housing-council-tax/

    Your case is directly addressed in the legalisation from the word go. Under council tax law if there is more than one household living in the property as their main residence, the property becomes a council tax home in multiple occupation (note that HMO status has nothing whatsoever do to with the HMO definition applicable under housing law)

    so in your case there are 3 households present, you + lodger 1 + lodger 2.

    so to answer your question - yes CT must be paid and it must be paid by YOU for the following reasons:

    a) you are the LL of a council tax HMO, so it is your sole liability to ensure CT is declared correctly. The hierarchy does not apply in the case of a HMO, it is always and only the LL who is legally liable for the whole property

    b) now look at who are the occupants and what is their status?....
    - occupant 1 = you. However you have full time student exemption so you do not count
    - occupant 2 = "part time" student. A part time student is not an exempt category so means that you as the LL now have a person resident creating a liability for CT which you as LL of a council tax HMO are legally liable to pay.
    - occupant 3 = "unemployed". An unemployed person is not an exempt category so means that you as the LL now have a second person resident creating a further liability for CT which you as LL of a council tax HMO are legally liable to pay.

    it appears at this stage both occupants 2 & 3 are not exempt, therefore you have at least 2 people counting for CT and therefore you, as the liable person cannot claim the single person discount and so will be liable to pay 100% of the CT rate for your property

    the law was specifically designed to address the scenario where an exempt student landlord has non exempt lodgers, as it makes the LL liable for paying the council tax, otherwise tax would be evaded. It is then up to the LL how he funds that cost, the obvious solution being to include the extra cost in the rent - assuming of course your lodger agreement allows you to do that. If you cannot increase the rent because you have a "fixed price contract" in place, then you as the LL will have to pay the council tax out of your own profit.

    if occupant 2 can prove he is an exempt student , ie is on a full time course at a recognised educational establishment on a course lasting at least 1 full academic year, then it is your responsibility as the CT HMO liable person to hold evidence of his status yourself, ie you'll need a copy of his CT letter from his university (the same letter as you should already have in respect of your own student status)

    as occupant 3 is an unemployed adult >18 years old he would be entitled to claim council tax reduction. It is down to the policy of your individual council how much discount they will give him. If he gets less than 100% discount then it is still your legal liability as the CT HMO LL to pay "his" CT. If he gets CT reduction then it is your responsibility to ensure that fact is registered against your own liability as the CT bill is entirely in your name
    Last edited by 00ec25; 28-11-2017 at 1:34 PM.
    • InvoluntaryAdult
    • By InvoluntaryAdult 28th Nov 17, 1:29 PM
    • 5 Posts
    • 1 Thanks
    InvoluntaryAdult
    • #9
    • 28th Nov 17, 1:29 PM
    • #9
    • 28th Nov 17, 1:29 PM
    So do I completely loose my student exemption? The student exemption gives me a 100% discount on CT
    • 00ec25
    • By 00ec25 28th Nov 17, 1:35 PM
    • 5,554 Posts
    • 4,933 Thanks
    00ec25
    So do I completely loose my student exemption? The student exemption gives me a 100% discount on CT
    Originally posted by InvoluntaryAdult
    yes, read my post above which appeared as you were posting
    • InvoluntaryAdult
    • By InvoluntaryAdult 28th Nov 17, 1:40 PM
    • 5 Posts
    • 1 Thanks
    InvoluntaryAdult
    As I understand a HMO is 3 tentants or more. In this situation there are only two. So it isn't technically a HMO
    • 00ec25
    • By 00ec25 28th Nov 17, 1:43 PM
    • 5,554 Posts
    • 4,933 Thanks
    00ec25
    As I understand a HMO is 3 tentants or more. In this situation there are only two. So it isn't technically a HMO
    Originally posted by InvoluntaryAdult
    oh dear, I specially stated that there is a separate definition for Council tax HMO which is NOT that used for housing law

    read my post again

    council tax regulations 1992
    - classes of property, para 2: class C - houses in multiple occupation:
    http://www.legislation.gov.uk/uksi/1992/551/made

    Houses in multiple occupation, etc

    Class C a dwelling inhabited by persons who do not constitute a single household, each of whom either–
    (a)is a tenant of, or has a licence to occupy, part only of the dwelling; or
    (b)has a licence to occupy but is not liable (whether alone or jointly with other persons) to pay rent or a licence fee in respect of the dwelling as a whole.
    Last edited by 00ec25; 28-11-2017 at 1:47 PM.
    • InvoluntaryAdult
    • By InvoluntaryAdult 28th Nov 17, 1:50 PM
    • 5 Posts
    • 1 Thanks
    InvoluntaryAdult
    Thank you 00ec25 for your extremely thorough and well explained advice
    • 00ec25
    • By 00ec25 28th Nov 17, 2:25 PM
    • 5,554 Posts
    • 4,933 Thanks
    00ec25
    As I understand a HMO is 3 tentants or more. In this situation there are only two. So it isn't technically a HMO
    Originally posted by InvoluntaryAdult
    BTW your comment above re the housing law HMO definition is wrong anyway. It is not 3 tenants, the Housing Act 2004 definition is: http://www.legislation.gov.uk/ukpga/2004/34/part/7/crossheading/meaning-of-house-in-multiple-occupation

    you comprise 3 households - fact, so are in reality both a council tax HMO and a housing law HMO. Whether your individual council imposes any licensing conditions on your housing law HMO is something you can check for yourself on that council's website.

    also, if you actually own this property (rather than rent it yourself) then the fact you have more than one lodger means you are also now liable for Capital Gains Tax when you sell it (less any relief you can claim)
    https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64702
    Last edited by 00ec25; 28-11-2017 at 2:47 PM.
    • CIS
    • By CIS 28th Nov 17, 2:28 PM
    • 10,114 Posts
    • 5,787 Thanks
    CIS
    Just for clarification, the 'Class C' definition for a HMO given above is the original, this was amended at a later date but the overall result is still that the owner remains liable in a council tax HMO.

    Class C
    a dwelling which
    (a) was originally constructed or subsequently adapted for occupation by persons who do not constitute a single household; or
    (b) is inhabited by a person who, or by two or more persons each of whom either--
    (i) is a tenant of, or has a licence to occupy, part only of the dwelling; or
    (ii) has a licence to occupy, but is not liable (whether alone or jointly with other persons) to pay rent or a licence fee in respect of, the dwelling as a whole.
    I no longer work in Council Tax Recovery as I'm now a self employed Council Tax advisor and consultant with my own Council Tax consultancy business. My views are my own reading of the law and you should always check with the local authority in question.
    • agrinnall
    • By agrinnall 28th Nov 17, 9:01 PM
    • 18,688 Posts
    • 14,407 Thanks
    agrinnall
    What we haven't established yet, as I alluded to in post #2, is whether the part time student qualifies for an exemption of their own, which is based on the length of the course and the number of hours study each week - although it says full time it's certainly possible to be a part time student and still do the required number of hours.


    https://www.gov.uk/council-tax/discounts-for-full-time-students


    If both of you qualify for exemption then there is only one CT payer in the property so a 25% discount will be available.
    • InvoluntaryAdult
    • By InvoluntaryAdult 29th Nov 17, 12:19 PM
    • 5 Posts
    • 1 Thanks
    InvoluntaryAdult
    Also just another thought, if the two lodgers were both full time students would it mean that there is a total exception from CT?
    • gettingtheresometime
    • By gettingtheresometime 29th Nov 17, 12:37 PM
    • 3,129 Posts
    • 7,300 Thanks
    gettingtheresometime
    Also just another thought, if the two lodgers were both full time students would it mean that there is a total exception from CT?
    Originally posted by InvoluntaryAdult
    Would have thought so but as they aren't that's a moot point unless you were planning on a) kicking them out & getting ft students in their place or b) lying.
    Lloyds OD / Natwest OD / PO CC / Wescott / Argos Card cleared thanks to the 1 debt v 100 day challenge


    Next on the list - JD Williams
    • Lokolo
    • By Lokolo 29th Nov 17, 12:38 PM
    • 19,849 Posts
    • 14,927 Thanks
    Lokolo
    Yes that is correct
    • 00ec25
    • By 00ec25 29th Nov 17, 1:56 PM
    • 5,554 Posts
    • 4,933 Thanks
    00ec25
    Also just another thought, if the two lodgers were both full time students would it mean that there is a total exception from CT?
    Originally posted by InvoluntaryAdult
    if all the occupants of the property are exempt (or in the context of students and to be technically correct they are "disregards") then patently no CT is payable dependent on a couple of extra conditions:
    a) the owner of the HMO does not himself live there as his own main residence, so the only occupants are all disregards
    OR
    b) if the owner does live there, he is himself also a disregard, so no one has a liability

    if, in your context as a full time student running a CT HMO, you want to avoid being a LL liable for CT, you need to make sure your fellow occupants are all "exempt" themselves
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

330Posts Today

2,243Users online

Martin's Twitter
  • I realised I forgot in my links earlier. 1. Help to Buy ISAs, how they work and best buys...? https://t.co/BSCNPeqiVF

  • RT @whatdawndid: Thanks to uncle @MartinSLewis I just received £200 back, just like that from the student loan company! Turns out that the?

  • RT @LaraLewington: Shocked and saddened by Cheggers news. Working with him on It?s A Knockout was my 1st job in telly when I was just 19. H?

  • Follow Martin