Consumer Rights: Taxing times for would-be landlords
Take a lodger and pull in extra cash / Get a refund when the sofa firm goes under / And keep the bailiffs from the door
Sunday 21 June 2009
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
- 1 Cyclist who knocked down three-year-old girl says his life has been 'destroyed'
- 2 Chelsea victory parade: Chelsea mocked on Twitter as 'tens of fans' pack the streets of London
- 3 US warned by Chinese media to stop meddling or 'war will be inevitable'
- 4 Woman, 21, dies after taking contraceptive pill that 'caused fatal blood clot'
- 5 Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
The day that Britain resigned as a global power
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
A nation of inequality: How the UK is failing to feed its most vulnerable people
EU referendum: David Cameron to deny EU migrants and under-18s the chance to vote
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...
Day In a Page
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof