Will you be caught by the new bedroom tax rules?

0
889
bedroom tax rules

From April 2013, families on housing benefit that have one or more spare room will be hit by a new ‘bedroom tax’. Find out how the bedroom tax rules work, how much you’ll pay, and whether you can avoid it.

The so-called ‘bedroom tax’ welfare reform comes into force from this April.

It isn’t technically a tax at all, as it’s a reduction in benefits rather than a payment – but the name has stuck.

We answer the most common questions below (including bedroom tax exemptions and how you can avoid paying it).

Who has to pay the bedroom tax?

The government estimates that 660,000 households will have their benefit cut.

The bedroom tax applies to those who receive housing benefit in social housing (those who rent from councils or housing associations). Private sector tenants are not affected.

If you are of working age and are considered to be under-occupying your home, you may lose part of your housing benefit.

The government estimates that 660,000 households will have their benefit cut.

Who doesn’t have to pay?

Pensioners and those in shared-ownership social housing are exempt from the bedroom tax.

The government has also recently ruled that parents who have severely disabled children who are unable to share a room with siblings will also be exempt from the bedroom tax.

How much will people lose?

If tenants are judged to have one spare room, the amount of rent eligible for housing benefit will be cut by 14%.

If they have two or more spare rooms, the cut will be 25%.

The government estimates that this will result in an average loss of about £14 a week for council tenants, and about £16 a week for those who rent from housing associations.

How many bedrooms are you allowed?

Each of the following are allowed one bedroom under the new rules:

  • An adult couple
  • Other adults aged 16 or over
  • Two children of the same sex aged under 16
  • Two children aged under 10 (regardless of gender)
  • Any other child under sixteen
  • A non-resident carer who occasionally stays the night

So you can’t keep a spare bedroom?

Not without losing some of your benefit. Parents who are separated are not allowed to keep a spare bedroom for a child who visits.

The number of bedrooms you have in your house is determined by your landlord’s tenancy agreement. In other words, you can’t claim that a spare bedroom is actually a living room or study.

The number of bedrooms you have in your house is determined by your landlord’s tenancy agreement.

What if you downsize your home in order to keep your benefit? Do you still have to pay while you search for a new place?

Yes.

What happens if you have children who are students living away from home?

As long as they sleep at your home for at least two weeks of the year, you will avoid paying the bedroom tax for them.

What if you can’t pay the bedroom tax – can you avoid it?

As things stand, tenants who find that they can’t pay the bedroom tax only have a few options open to them:

Related articles

Apply for Discretionary Housing Payments (DHP)

Every housing/council tax benefit department has a pot of money to give to those on housing or council tax benefit each year who are struggling. But there’s only a limited amount of money and once it’s gone, it’s gone. You may have to phone up your council or visit them in person, but some councils have the claim form online (find your council’s website here).

The first £4,250 you earn in rent from a lodger is tax free

Move to a smaller property/consider the private rental market

This is easier said than done, of course. There’s often a long waiting list for smaller social housing properties, while the private rental market is incredibly expensive in some parts of the country. But it might be an option worth exploring, depending on the local property situation.

Again, your council’s housing benefit department may be able to advise you on this (find your council’s website here). Charities such as Shelter also have advice centres which can also be an invaluable source of help and assistance.

Take in a lodger

The number of lodgers in the UK has shot up over the last few years, as people look to find ways to make money from their homes. There’s more information on how you can rent your spare room in our article how your home can make you money. Remember that the first £4,250 you earn in rent from a lodger is tax free.

What do you think of the new bedroom tax rules? Let us know by commenting below