How to avoid the ‘bedroom tax’ – Money tip #214

1 min read Published: 05 Apr 2013

What is the 'bedroom tax?

Recent changes to the housing benefit rules, dubbed the 'bedroom tax', will mean that those in social housing, who claim housing benefit, could  lose some benefit if they are deemed to have too much living space. Under the governments so-called 'size criteria' families will be assessed for the number of bedrooms they actually need. Only those of working age can have their benefit reduced and foster carers and families of armed services personnel will be exempt.

Can the reduction in housing benefit be avoided?

Yes, any spare bedrooms can be rented out to a lodger then they will not be classed as empty rooms for housing benefit. Permission from the landlord will be required prior to bringing in a lodger. An income of £20 per week can be retained without affecting any benefits, anything over this amount will result in benefit being reduced pound for pound. However, after Universal Credit is introduced having a lodger will mean housing benefit will be reduced but tenants will be allowed to keep all the income. The first £4,250 of annual rental income is tax free. If considering taking in lodgers it's important to make sure comprehensive references and checks are made.