Lodger & Benefits

KatiePrecilla

Hi

I am currently a single Mum of 2 who works part time and gets WTC & CTC.

My sister wants to move back to the local area and has asked about lodging with me for 6-8 months until she saves enough for her own place.

She will be paying me 'rent' of approx £200 a month. Do I need to tell the tax credit people and how do you think it will effect my benefits?

Thanks in advance!

Mupette

You could keep it quiet like Orville has suggested, but then again, do you have any neighbours that are likely to ring up and 'grass'.

I believe honesty is the best policy, you wouldn't want to be on here in a few months complaining that someone has shopped you and you now have to pay x amount of money back...

If you get any other benefit like housing or council tax then they will want to know too.

Sorry

RAS

How much would be rent and how mch would be contributions to the cost of her food and utilties, plus half the council tax?

Kimitatsu

As long as the amount you charge is less than the £4250 per year deemed tax free by HMRC for having a lodger you dont need to declare it on the tax credits forms.

More details here:

http://www.hmrc.gov.uk/forms/tc600-notes.pdf

Property income.

Don't include income from the 'rent a room' scheme..

If you earn more than the £4250 then it needs to be declared. Just a note though your sister would not be able to claim housing benefits to cover this cost as you are a family member (I know this was not the intention but just in case something happens later on)

Badger_Lady

I would have thought the difficulty lies in whether they consider your sister to be a lodger, rather than a family member.

Surely they'll be dubious of the "£200 a month" deal, particularly if that's below market rate. They may want to consider her earnings when calculating your entitlements.

I say this because I had a surprisingly difficult time with the local authorities when a lodger (genuine stranger answering an advert) moved into my house whilst claiming benefits. She was all but accused of being in a relationship with me and therefore no longer entitled.

Kimitatsu

But unless either one of them claims housing benefit, I doubt the question would ever be asked to be honest!

You can set the room rate at whatever you like, so there would be no reason for anyone to check on the sisters employment or income.

I know its mad!

Jowo_2

I do not know how/if the income you receive from renting the room will affect receipt of your means tested benefits.

But while under the Rent a Room scheme, you do not have to pay tax on rental income less than £4250 a year which is completely tax free, remember that the tax system is sometimes entirely separate from the benefits system so something that is regarded as tax free isn't necessarily always something that has no impact on means tested benefits. Sorry I can't be more helpful than this.

Loopy_Girl

Personally I wouldn't see a family member staying with me as a 'lodger'...merely helping out and me being given 'keep'.

Much like when you are a kid and you pay the old dears dig money.

If it was me I wouldn't say anything to anyone to be honest...it's not like you are having a complete stranger (a 'lodger') in your home, it's a private family matter.

Jowo_2

Loopy_Girl wrote: »

Personally I wouldn't see a family member staying with me as a 'lodger'...merely helping out and me being given 'keep'.

...

I think from the perspective of housing law and the tax/benefit systems, a person who lives with the landlord and pays towards their rent and services are classed as lodgers (or excluded occupier).

At a personal level, this person is a friend, relative or partner, and may very well be regarded as a guest but at a legal level, if they aren't a tenant or co-owner, then they will get categorised as a lodger (or perhaps as someone occupying it with a licence, but I'm not sure of this last point).

Kimitatsu

Loopy_Girl wrote: »

Personally I wouldn't see a family member staying with me as a 'lodger'...merely helping out and me being given 'keep'.

Much like when you are a kid and you pay the old dears dig money.

If it was me I wouldn't say anything to anyone to be honest...it's not like you are having a complete stranger (a 'lodger') in your home, it's a private family matter.

Problem is in todays litigious world, you are better off having a legal agreement as a lodger that way the OP is covered if tax credits ask her about the income. If it is from a lodger then she does not have to declare it under the rent a room scheme, but if it is extra income into the household she does.

KatiePrecilla

Thank you all for your advice.

The £200 is literally to go towards the bills, food etc, so more a contribution rather than official rent