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
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 Sabina Altynbekova, the girl branded 'too good looking' for volleyball, says social media obsession with her is a 'bit much'
- 2 Disney heiress Abigail disowns her share of family profits in West Bank company
- 3 The secret report that helps Israel hide facts
- 4 'Women should not laugh in public,' says Turkey's Deputy Prime Minister in morality speech
- 5 Israel's propaganda machine is finally starting to misfire
The secret report that helps Israel hide facts
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
A day in the life of Vladimir Putin: The dictator in his labyrinth
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
Richard Dawkins tweets: 'Date rape is bad, stranger rape is worse'
Boozy, ignorant, intolerant, but very polite – Britain as others see us
- < Previous
- Next >
iJobs Money & Business
£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...
£450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...
£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...
£500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...
Day In a Page
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000