Lodgers and the Universal Credit

Could anyone offer an answer?

Due to the bedroom tax, I am looking at ways a person might be able to manage. If a Lodger is taken in, then obviously they may face a Non Dependent Deduction, which is potentially less than the size related criteria.

Renting a room is non taxable below a set amount. But is it treated as income for UC does anyone know?

A lodger would not be living in the same household as the “landlord” so would not attract a non-dep deduction. If they were part of the household (ie, not paying, just living like a friend) that would be different.

How it will work is that the under-occupancy deduction will still apply, but payments derived from a lodger are totally disregarded for UC. This is a benefit which for income other than earnings follows the Pension Credit line: if it isn’t expressly defined as income in the regs it’s disregarded. So taking a lodger and charging more than the deduction (which you would: at 14% of eligible benefit the deduction isn’t enormous with one room) would leave you better off.

Thank you ever so much.

This makes a lot of sense when reflecting upon it. I wonder if the regs will get changed if the media expose stories of people taking in lodgers and misrepresent the actual amount of rent paid!

We’ll need to get used to the difference between a ‘household’ and an ‘ee-boo’ (extended benefit unit).

Non-deps are in the EBU but not the household.  Boarders and sub-tenants seem to be in neither.

HB/CTB Circular A4/2012 states that boarders/lodgers will be taken into account when assessing bedroom need and so there should be no reduction in the HB claim for under occupancy. The example they give is that of a couple with one child and a lodger living in a 3 bedroom house who would be fine.

There will be an effect on other benefits i.e. Universal Credit in that whilst the first £20 per week income from a lodger will be ignored the rest will count.  There is a little bit more information included on this in the toolkit on pages 41-43.

Link here:- http://www.dwp.gov.uk/docs/a4-2012.pdf

I assume this is the most up to date circular concerning the bedroom tax.

The trouble is that that isn’t reflected in the draft regs on household composition.  It was proposed to replace the £20 / 50% disregard by a 65% taper as well.

The link is to a Housing Benefit circular detailing the changes to HB from April - but the problem is that the way lodgers and income from them is treated will be different for HB and for Universal Credit - which does make advising people thinking of taking in a lodger difficult.

This article in the housing press states that income from lodgers to be disregarded in UC

http://www.insidehousing.co.uk/tenancies/lodger-rules-to-ease-impact-of-bedroom-tax/6522846.article

I can see in the draft UC regs that lodgers are excluded from the EBU and therefore not entitled to a room .... but I cant see where income from lodgers disregarded.  In fact I cant see the disregarded income categories ... probably being thick - could someone help?

Thanks
Sarah

From the Universal Credit Stakeholder Engagement Workshops Q&A in July.

Q:  Currently the rules for deductions regarding income from lodgers are complex – how will this be dealt with under UC?

A:  Boarders and sub-tenants will be ignored in the calculation of the housing costs element.  That means they will not be allocated a bedroom in determining the level of the LHA or whether an under-occupation deduction is applied but all income received will be fully disregarded.

There is no disregarded income list. There is only a list of what counts as income other than earnings. If it isn’t in the list, it doesn’t count (and I have checked that the reference to income taxable under certain provisions of ICTA does not include rent of any sort).

Thanks :)

Thanks for this clarification…will help when we advise our customers on UC., but surely other income based regs will have to be amended to ensure that all claimants are treated equally until full migration/implimentation?