pension credit, cash in hand lodger ??

oh_know

Hi
My mother in law was diagnosed with lung cancer about 8 weeks ago. So her hubby and her shut their business and retired early

I know what they can claim (pension credit and council tax benefit) and will aim to backdated it to the date their business closed

they are basically on the breadline right now with hardly any savings!

The issue I have is that they have a student living with them who pays cash in hand (450 a month) this is for food as well.

We have no record for the payment but he is registered on the council tax form. Aparently we are supposed to be able to provide evidence of "other income" - but I cant !!

So should I just state the amount in the claim anyway ?

(I dont want to be fraudulent by hiding it but will it open a can of worms if they find that they have been having cash in hand ?)

Note: I dont know what the yearly limits would be for tax ?

Don't want too much more stress so I think we will just declare it

But welcome any thoughts please

Note: we are trying to lease the business out so the beneift claims should only be for a total of about months (with a bit of luck)

Kind regards
Tom

Fiddlestick

oh_know wrote: »

The issue I have is that they have a student living with them who pays cash in hand (450 a month) this is for food as well.

We have no record for the payment but he is registered on the council tax form. Aparently we are supposed to be able to provide evidence of "other income" - but I cant !!

Well of course you can't prove it - it's not been legally declared for tax purposes.

Whiteknight

Again ignore the idiotic advice from kev25v6.

If the payments from the lodger are cash in hand does the lodger get any receipts or does your mother in law keep a record of amounts paid (in a note book for example)

This is evidence of the money that she is getting from the lodger and if food is provided Pension Credit will not take into account the full £450 a month which is being paid.

You mentioned that they shut down a business - I'm assuming this was a self employed business and sounds like it could still be a going concern if they are trying to lease it out.

My advice is to get them to call the Pension Service on 0800 991234 and get them to do a calculation - remembering for them to declared everything.

kb92830

Oh_know

Currently £4250 per year can be earned tax free under the goverment rent a room scheme which means that on a rent of £450 pm they are £1150 0ver the tax free allowance. However if as you say the rental amount also includes food then I would suggest that if you declare it you declare £350 per month as rent and £100 as contribution to the grocery budget. These figures do not seem unreasonable and are unlikely to be questioned.

The biggest issue you will face is that you have an additional adult in the house that effectively provides an income to you parents, that in itself may affect their eligibilty to benefits.

I owuld suggest you speak to a benefits advisor as there may well be benefits you haven't considered. The first that comes to mind is the carers allowance which you father may be able to claim depending on the condition of your mum.

oh_know

Thanks for the replies
As I understand it the pension credit is allowed for them as they are 64 (him) and 57 (her) and are earning less than 210 per week (with savings less than 10k too)

The pension credit will therefore top up there income to 210 per week based on the fact that they have contributed to NI for over 30 years

As I say it should be for a just 6 months as they should be able to lease out the place

They are all for claiming nothing but thats not fair - they deserve to claim whats rightfully theirs

I dont think a student paying a small amount would have much of a bearing other than for taking into account for their "income"

Many thanks

Oldernotwiser

oh_know wrote: »

I dont think a student paying a small amount would have much of a bearing other than for taking into account for their "income"

Many thanks

£450 pm, even if that includes food isn't really a small amount.

oh_know

Bad terminology I suspect !
What I mean is £450 A Month for a couple to live off, paying council tax, utilities, food etc. is impossible ! and hence our lovely benefits system comes to the rescue (I hope !)

nannymiaow

Have you thought about DLA if there are mobility or care needs. I would have thought there would be with a diagnosis of lung cancer. This is non means tested and not counted as 'income' if awarded.

Not wanting to be morbid in any way but the special rules for DLA could possibly apply.

[Deleted User]

ignoring the lodger issue,which will have to be declared anyway,just want to pick up on the post above re:dla,if a terminal prognosis has been given then dla can be applied for under the special rules which will speed up the process and isnt means tested or taxable

BevieB

Pension Credit disregard part of the Lodgers money and take 50per of the balance as the income. Cant remember exact figures although it will come out approx 40per taken into account, if that makes sense.
If DLA care middle rate or higher awarded then partner should claim Carers Allowance which would give partner an income and cares premium to PC/HB.

Hammyman

Fiddlestick wrote: »

Well of course you can't prove it - it's not been legally declared for tax purposes.

I don't know why because the "Rent a Room" scheme allows you to rent out a room and not pay tax on, OTTOMH, about £4500 a year.