I'm taking in a lodger, a graduate I know who needs a home until she gets on her feet and finds a full-time job. She's working part-time and wants to pay rent – which will come in useful. She'll have her own room but will have to share the kitchen and living room with the family. How much should I charge her and do I have to pay tax on what she gives me?
The money your lodger gives you counts as income and you must pay tax on income if you have more than the personal allowance which, this year, is £6,475 for people aged up to 65, £9,490 for people 65 to 74 and £9,640 for people 75 and over. But you are allowed a certain amount of rent, tax free, from a lodger who lives in your only or main house and has a furnished room if you let the room under the Rent a Room scheme; this allows you to receive a total of £4,250 from a lodger without paying tax.
How much you charge depends on how much she can afford and what you're providing. The rent is likely to include a sum for gas and electricity so work out what would be reasonable given how much your bills are usually. Will she have the use of your phone or use a mobile? Will you be cooking for her or will she do her own cooking and buy her own food? This is usually easiest. If you decide that she should pay £80 a week you won't have to pay tax as the total you will get from her in a year will be just under £4,250 and so will be tax free. If she pays you £100 a week you will have to pay tax unless you don't have other income, from earnings, benefits, pensions or savings, that brings you above your personal allowance.
If you are renting your home, check whether your lease allows you to take in a lodger. If you are paying a mortgage it's best to check that your lender is happy, and your home insurance company is happy.
There are advantages and disadvantages to the scheme – just work out what is best for you.
One of the drawbacks of the Rent a Room scheme is that you can't claim any of the expenses of letting the room, such as insurance and wear and tear, repairs, heating and lighting. Instead of joining the scheme, you could be better off declaring all of your income from your lodger to HM Revenue & Customs on your tax return and claiming expenses. You'll find more information about the scheme at www.direct.gov.uk.
I ordered a sofa six weeks ago and paid a cash deposit. They promised delivery in three weeks but the shop has gone out of business and the sofa hasn't arrived. How do I get my money back? They must have known they were in difficulty when they took my order.
It's a common problem at the moment. You need to find out if the shop was a limited company, which is likely if it was part of a chain, or run by a sole trader or partnership. If it was a limited company it could be in receivership or in liquidation. Try to find out who the liquidators or receivers are and put in a claim for compensation. Whether you get anything depends on whether there are any assets left after priority creditors, such as the landlord or Revenue & Customs, have been paid.
If the shop was run by a sole trader or partnership, the owner or partners are still liable even though they've stopped trading. You could sue for compensation but if the trader can't pay or has gone personally bankrupt you'll be throwing good money after bad. Talk to your local authority's Trading Standards office, the local Chamber of Commerce, a trade association if the shop belonged to one, local accountants or solicitors who deal with receiverships, the local Official Receiver's office or Companies House.
I'm in debt and I've fallen behind with the mortgage repayments. The lender is threatening to take us to court and repossess the house. But I haven't told my wife and sons. I don't know how to tell them and keep hiding the letters. I got into trouble when I stopped getting overtime pay at work but I kept telling my wife we were managing fine. What can I do? I feel as if I've let everyone down and am like a bear with a sore head at home.
First things first: tell your wife. Sit down with all the paperwork and go through it showing her what the problems are. You'll be much easier to live with once you've come clean. You don't want your wife finding out accidentally or only discovering the truth when the bailiffs turn up to change the locks.
This isn't the end of the world but you need to take action now and everyone needs to be working together to resolve the potential crisis. Do you have other debts? Are you behind with bills and other credit agreements as well as your mortgage? Get all your paperwork in order. Work out what's coming into the house and what you spend down to the last penny. Set out all the loans, credit agreements, card bills and household bills you have. Make an appointment to see a money adviser at an advice centre or Citizens Advice Bureau as soon as possible and contact your lender explaining that you are aware there is a problem and you're seeing an adviser. You can also get advice from the Consumer Credit Counselling Service (0800 138 1111) or National Debtline (0808 808 4000) Be honest with the adviser. He or she won't be able to help you unless they know the whole story.
As an industry, mortgage lenders have agreed to try to ensure that as many people as possible who are behind with their repayments stay in their homes. Also, the courts have been told to be more sympathetic to those who want to stay put and who are genuinely making efforts to meet at least part of their repayments.
Your lender may offer the following options: restructuring your loan over a longer period of time, or accepting interest-only payments until you get straight. You may even be able to apply for financial help from the Government's Mortgage Rescue Scheme, check out www.communities.gov.uk for more information.
At the moment, the lender has no idea why you're in arrears and ignoring the letters so the only way to get a response is to threaten repossession. Act now.
Do you need a financial makeover?
Write to Julian Knight at the Independent on Sunday, 2 Derry Street, London W8 5HF firstname.lastname@example.org