taking in a lodger

raybird

my partner up and left 3 weeks ago with his daughter, ive now got a spare room which i was thinking of renting out.i have a mortgage to pay, i work part time have a son at school, the only benefit i claim is WTC/CTC which is currently £128.00 per week, i dont qualify for council tax benefit i get the 25% discount. i no if i take in a lodger the council tax will go back up but would it affect my WTC/CTC, ive hunted all round the internet but keep finding different answers
thanks

HappyMJ

It does not affect your tax credits.

raybird

thank you for that ill start getting the spare room ready

HappyMJ

raybird wrote: »

thank you for that ill start getting the spare room ready

Your welcome....keep the rent under £4,250 per year. See here for more... http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4017804

Pont

If you take in a lodger under the rent a room scheme your tax credits are unaffected.

http://www.hmrc.gov.uk/leaflets/wtc2.pdf

(see halfway down page 22)

If you take in a lodger and charge more than £4250 per year, then tax credits could well be affected.

raybird

thanks i was looking at £350 per month that seems to be the going rate in this area which is just short of the limit. also could i ask for the rent a room scheme do i need to register with any one ?
thanks

Badger_Lady

You don't need to register or anything as long as you're under the limit - you can just start renting the room out. Spareroom.co.uk always works best for me among the paid sites... but also go to Gumtree, local free ads and if you have some contacts put an ad on the noticeboards in local businesses / colleges.

If you PM me I can send you template documents for lodger application forms, standing order forms and houseshare agreements. Loads of us use the same ones

xylophone

Don't forget to check with your mortgage provider and insurer that they are content.

raybird

i will do that when every thing reopens after the xmas break
thanks

Yorkshire_Pud

raybird wrote: »

thanks i was looking at £350 per month that seems to be the going rate in this area which is just short of the limit. also could i ask for the rent a room scheme do i need to register with any one ?
thanks

I have a question related to this 'under £4250 a year' rule.

If someone rents out a room in their house under the rent a room scheme at £400 a calender month for 10 months; total £4,000: in a 12 month/tax year then they still qualify to be in the rent a room scheme?

Seems to me people divide £4250 by 12 months and come up with £354.16 and set that as their rent. If the going rate is more than that but still want the simplicity of the rent a room scheme charge more for less months? Plus time to recharge your batteries, redecorate the room etc.

So if you had a house in London you could rent it out during the Olympics at £2000 a week for 2 weeks and still be in the rent a room scheme?!

I am trying to clarify a point and not get into an evil landlords overcharging their lodgers debate but there will be cases where it is appropriate to charge the market rate and that rate may be above the £354.16 a month level:)

Badger_Lady

Hi Yorkshire Pud, yes you are correct... of course that all depends on how you want to run things. A good, reliable lodger who you get on well with and who always pays their rent is invaluable - the last thing you want to do is kick them out after X months in order to opt out of a tax relief scheme!

If your market rent is higher and you're looking for a long-term lodger, you may be better off just registering for income tax and then choosing to either deduct expenses or use the rent-a-room-scheme to reduce the amount you pay. Personally, I dip in and out of the sceme on occasion due to renting out one or two rooms depending on my mood and circumstances.