Author Topic: Lodgers - UC, tax and NI  (Read 989 times)

NeuralgicNeurotic

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Lodgers - UC, tax and NI
« on: May 16, 2017, 11:01:22 AM »
Mum has told me that she is leaving her house to me, so I've been trying to make some plans for the future. Having looked at all the options, the simplest way forward would be for me to move into the house, and find a couple of lodgers (the house has 2 decent sized bedrooms, and a box room, which will be fine for me). The greatest impediment to this will be getting my mad, stranger-phobic brain to co-operate.


My biggest fear is Universal Credit, because I honestly don't think I'll cope with the level of intrusion and conditionality involved. Would having income from lodgers allow me to avoid it?


Another worry is making sure I'll qualify for a state pension, if such things still exist by the time I reach retirement age.  Having done some reading up on tax and NI, it seems that, depending on how much is left from the rental income after bills etc have been paid, I'll be paying tax, and theoretically be eligible to pay class 2 NI contributions.


The problem is that practially everyone I mention this to tells me that HMRC are tricky to deal with and that I need to  sit down and talk to someone face to face about it.


Would I need to find a financial adviser, or are there other organisations out there that can offer this kind of guidance?


Sorry if this post is disjointed and rambling. I'm having to fight off 'magic thinking' about how even asking these questions will cause something terrible to happen.

lankou

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Sunny Clouds

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Re: Lodgers - UC, tax and NI
« Reply #2 on: May 16, 2017, 11:24:05 AM »
I can't advise on the aspects you raise, save that you may wish to consider whether any of this might be considered a 'change of circumstances' and trigger a benefits migration of some sort.  I don't say that it will, just that it cannot be guaranteed as a way of staving off any change in benefits.

However, I'd like to raise a few other points.

Having more people in the house may affect any exemptions or assistance you get with council tax and you would need to consider whether there may be any knock-on effects from that.

You would also need to consider whether it may affect your insurance.

Also check out your rights to turf the lodgers back out if you want/need to.  In the past, there used to be no security for lodgers if the landlord was already living on the premises when they moved in, but check out what the situation is now.

You may find Landlordzone website useful for the landlord side of things rather than the personal benefits side of things.  You should get a quick hit in a search engine. 

I grew up in a house with lodgers, but although I briefly had one many years ago, it was informal, a favour to a homeless work colleague (not, as it happens, a friend).  Looking back on it, I wish I'd thought ahead as you are doing.


NeuralgicNeurotic

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Re: Lodgers - UC, tax and NI
« Reply #3 on: May 16, 2017, 03:27:26 PM »
Thanks for the link, l'Ankou.  >tah<


Sunny, I'm working on the assumption that it would represent a change in circumstances. It would be a change of address, so moving there would probably trigger reassessment and migration.  :-(

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Also check out your rights to turf the lodgers back out if you want/need to.  In the past, there used to be no security for lodgers if the landlord was already living on the premises when they moved in, but check out what the situation is now.

It's still the case here, as lodgers would be classed as licencees, rather than tenants.


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Having more people in the house may affect any exemptions or assistance you get with council tax and you would need to consider whether there may be any knock-on effects from that.

You would also need to consider whether it may affect your insurance.

We still have rates here, and there are subsidies (paid through HB) for people classed as being on a low income, but I don't as yet know what the thresholds are. The re-organsation of the councils here in 2015, and the replacement of rates relief via HB with a new rebate scheme as UC is introduced also creates a lot of uncertainites. Until the dust settles it's something I'm keeping an eye on, rather than trying to nail down precisely. In fact, the whole system could change if we're in for a prolonged spell of direct rule, and then there's what happens in the event of a border poll in favour of unification. There are a lot of variables to be considered at the moment!


To be honest, I find all this terrifying, but it's a possible way forward, so it needs to be explored. Many thanks to you both for your suggestions  >bighugs< .

Sunny Clouds

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Re: Lodgers - UC, tax and NI
« Reply #4 on: May 16, 2017, 04:42:10 PM »
PS I realised when I read your reply that of course the benefits, rules, tax, property law etc. is a bit different your side of the water and I ought to have phrased my reply accordingly.  My apologies.

NeuralgicNeurotic

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Re: Lodgers - UC, tax and NI
« Reply #5 on: May 16, 2017, 05:59:22 PM »
No need toapologise, Sunny. There's enough of an overlap in law, tax and regulation to make advice from folks in GB relevant.  >hugs<

Sunny Clouds

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Re: Lodgers - UC, tax and NI
« Reply #6 on: May 16, 2017, 06:55:14 PM »
Now all I need to do is to wait for unification, do a bit of photoshopping of the family records to pretend my Irish ancestry is a bit more recent rather than several generations back, apply for an Irish passport and move in with you!  (If there's unification, I bet an industry will fast pop up checking ancestry and entitlement and even providing fake evidence or ID for a fee, but I'd never pull it off.)


NeuralgicNeurotic

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Re: Lodgers - UC, tax and NI
« Reply #7 on: May 16, 2017, 09:20:22 PM »
You'd be very welcome, Sunny. All we'd need to worry about then would be how to pay for our respective healthcare needs ...

Monic1511

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Re: Lodgers - UC, tax and NI
« Reply #8 on: May 16, 2017, 09:46:43 PM »
Hi NN

I guess your worried about Universal Credit so the first question is do you live in a "Full Service" area or do you live in a "live Service" area.
In a Full Service area any change in circs triggers an automatic transfer to UC, in a Live service area you will not qualify for UC due to gateway conditions.  Use this link to check which area you're in http://universalcreditinfo.net/

Secondly - if you own a 3 bed house outright why would you want lodgers?  OK you might not be able to heat the 2 spare rooms adequately but if someone moves in with you you could lose SDP, single person discount etc so why bother.  I live in a 3 bed house alone, granted I don't rely on income related benefit.

As for state pension, there is no point worrying about it unless your within 1 year of getting state pension, again check here https://www.gov.uk/state-pension-age

IF its all terrifying then can it wait for another day before you make your health worse by trying to imagine every possible scenario.

best wishes
Monic

SunshineMeadows

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Re: Lodgers - UC, tax and NI
« Reply #9 on: May 17, 2017, 09:01:10 AM »
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My biggest fear is Universal Credit, because I honestly don't think I'll cope with the level of intrusion and conditionality involved. Would having income from lodgers allow me to avoid it?

I have morning brain so i just want to check are you thinking in terms of coming off benefit and using lodger money as your income?

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if someone moves in with you you could lose SDP, single person discount etc so why bother.

Monic saying that prompted me to think even if you were no longer entitled to income based benefits maybe keep you claim live so it maintains the protections you got when things moved from Incapacity benefit to ESA.

I did find this here http://www.entitledto.co.uk/help/Universal-Credit-Sub-Tenants

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In contrast, under Universal Credit you will be able to keep in full all the rental income from sub-tenants or lodgers without it counted as income.

Maybe try using EntitledTo benefits calculator to see what is what at the moment http://www.entitledto.co.uk/benefits-calculator/



NeuralgicNeurotic

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Re: Lodgers - UC, tax and NI
« Reply #10 on: May 17, 2017, 09:25:38 AM »
Hi Monic

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I guess your worried about Universal Credit so the first question is do you live in a "Full Service" area or do you live in a "live Service" area.
In a Full Service area any change in circs triggers an automatic transfer to UC, in a Live service area you will not qualify for UC due to gateway conditions.  Use this link to check which area you're in http://universalcreditinfo.net/

As we're latecomers to UC, it's possible that N Ireland would be Full Service straight away. The local roll-out timetable can be found here:

http://revenuebenefits.org.uk/universal-credit/guidance/who-can-claim-universal-credit/who-can-claim-northern-ireland/


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Secondly - if you own a 3 bed house outright why would you want lodgers?  OK you might not be able to heat the 2 spare rooms adequately but if someone moves in with you you could lose SDP, single person discount etc so why bother.  I live in a 3 bed house alone, granted I don't rely on income related benefit.


The main reason would be reducing Brown Envelope Anxiety. Although I'd still be grappling with PIP, there would be some comfort in knowing that I wouldn't be left without any income at all in the event of something going wrong or I couldn't be mandated to do things that I'm not capable of, then sanctioned for failure to 'try hard enough'. Even now, in spite of my best efforts, I seize up with fear every day for a  few hours before the post arrives, and panic when the letterbox rattles. The idea that one day there might be an alternative is very appealing. 

The other reason is that in the past, solo living has been disasterous for my MH, so I've house-shared for many years. Although this takes its own toll on my MH (especially when one person moves out and someone new arrives), overall it has provided a stabilizing framework. Without going into detail, there are some things it's just more difficult to do when you're sharing a space with others. There is a big difference, though, between sharing accommodation on equal terms as a tenant, and being a resident landlord. I do question whether or not I'm up to to the task, given pain, fatigue and poor MH.

 
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As for state pension, there is no point worrying about it unless your within 1 year of getting state pension, again check here https://www.gov.uk/state-pension-age

I'll strike that off the list of anxious thoughts. Thanks!


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IF its all terrifying then can it wait for another day before you make your health worse by trying to imagine every possible scenario.


That's a good point, although it makes a change from being terrified about PIP.

And it goes without saying that I'd much rather have Mum around than anything else. 

Thanks for the advice, Monic.   >bighugs<

NeuralgicNeurotic

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Re: Lodgers - UC, tax and NI
« Reply #11 on: May 17, 2017, 11:20:37 AM »
Sunshine, yes I was thinking of using money from lodgers as income.  The condidionality surrounding UC worries me a lot, especially as it's beginning to intrude into the Support Group (or whatever equivalent exists in UC). It seems that anyone claiming any element at all will end up being harassed.  :-(

The N Ireland Executive did secure the ability to mitigate and adapt some elements of UC to account for local circumstances, but this package is in doubt due to the political situation here.


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Monic saying that prompted me to think even if you were no longer entitled to income based benefits maybe keep you claim live so it maintains the protections you got when things moved from Incapacity benefit to ESA.

Thanks, I'll look into what that would involve.


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Maybe try using EntitledTo benefits calculator to see what is what at the moment http://www.entitledto.co.uk/benefits-calculator/


A good link. Thank you.  >thumbsup< It's good to see in black and white how some of this would work.

You've given me some more to think about, Sunshine, so thank you  >bighugs< Although it's possible that I may just need to defer thinking about all of this until some time when my brain is not in Full-On Tizzy Mode.

Monic1511

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Re: Lodgers - UC, tax and NI
« Reply #12 on: May 17, 2017, 11:38:39 AM »
Hi NN,
Just had a thought, you know that there are no disability premiums in UC, you get the basic amount and if your amount when you're transferred is higher than what you'd get on uc then there is no increase at all no matter if the government gives a 1% rise or not.
A person on uc who gets pip is automatically £64 worse off (SDP) than a person on JSA or esa just cos they cannot claim sdp.
Sorry will return to this later when thinking clearly
Monic

NeuralgicNeurotic

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Re: Lodgers - UC, tax and NI
« Reply #13 on: May 17, 2017, 12:23:59 PM »
Just had a thought, you know that there are no disability premiums in UC, you get the basic amount and if your amount when you're transferred is higher than what you'd get on uc then there is no increase at all no matter if the government gives a 1% rise or not.
A person on uc who gets pip is automatically £64 worse off (SDP) than a person on JSA or esa just cos they cannot claim sdp.

So, basically if you're transferred from Income-Related ESA SG to UC ‘no work-related requirements group’ , you retain your benefit at ESA SG level, but it remains fixed and unadjusted for inflation, so the real-terms spending power of the payment will diminish over time.

You have to wonder what kind of mind thinks that's a fit way to treat sick and disabled people. 

Sunny Clouds

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Re: Lodgers - UC, tax and NI
« Reply #14 on: May 17, 2017, 02:14:00 PM »
I don't wonder, I know. 

Mind you, there was a point at which it dawned on me that the reason why it's difficult to see people in power in a country like ours as evil is that for the most part they don't actually get off on hurting people, they just don't care.  Think of that sort of person as a compulsive hoarder, only it's not clutter in their house, it's money, power, status.  When you think of it that way, it's easier, I think, to get your head round why they think it's ok to starve people.  Just turn a blind eye to it as much as a domestic hoarder might turn a blind eye to endangering others, e.g. fire risk, danger of walls/fences collapsing and people nearby being crushed etc.

So to extend the analogy, what you seem to me to be doing is to be looking at ways of protecting yourself from your compulsive neighbour, maybe putting up extra walls, only not to stop their clutter overflowing into your life, but to stop their power overflowing.  You're locking your front door to stop that compulsive hoarder stealing more of what you have and that we think they don't need, but that they, however irrationally, think and feel they do.

(I use this explanation without prejudice to the fact that there are evil people and that also compulsive power/money/status hoarders can become evil.)