There has been a lot of talk about 'bedroom tax' recently. If you're confused about bedroom tax, or you're not sure how it might affect you and your family, read on. thinkmoney has put together a simple guide to 'bedroom tax' that should tell you all the basics you need to know.
You may hear 'bedroom tax' being called 'under-occupancy', 'under-occupancy rules' or 'size limit rules'.
Is it actually a tax?
'Bedroom tax' is what the media and other outlets are calling it. However, it's not an actual 'tax'. You don't have to pay the government anything.
What actually happens is, if you are deemed to have a 'spare room', your housing benefit will be decreased. This means that you will have to pay a certain amount of your rent yourself, directly to your landlord.
When did it come into force?
1st April 2013.
Who is affected?
Housing association or council tenants of working age, who are claiming housing benefit to pay for some or all of their rent.
If you are a new claimant, and you haven't claimed housing benefit in the past 52 weeks, 'bedroom tax' won't apply for the first 13 weeks of your claim.
What exactly happens if you're affected?
If you are deemed to have 'spare rooms', the amount of housing benefit you are eligible for will decrease.
If you have one spare bedroom, 14% will be taken off your housing benefit payments.
If you have two or more spare bedrooms, a quarter (25%) of your housing benefit payments will be taken away.
You will have to pay your landlord yourself to make up for the portion of your housing benefit that has been taken away.
What is classed as a 'bedroom'?
The Government's regulations do not actually define what a 'bedroom' is. It's up to landlords to decide, based on the size of the property and what it says on the tenancy agreement. A room is either a bedroom or not a bedroom - there is no difference between single or double bedrooms.
What makes a bedroom a 'spare bedroom'?
A bedroom is a 'spare bedroom' if it is not occupied by any of the following people:
- A couple (who are only allowed to occupy one bedroom)
- A person aged 16 or over (who is allowed one bedroom if they are not part of a couple)
- Two children aged under 16 of the same gender (they are expected to share)
- Two children aged under 10 (children of both genders are expected to share)
- Any other children (either only children or ones who cannot fit in the 'shared' room)
- A carer if somebody in your home needs one to stay overnight (they will have a room to themselves)
If a bedroom in your home is not occupied by any of the people above, it is likely that you will have to pay 'bedroom tax' on it.
Are there any exceptions?
There are sometimes allowances where you can keep a bedroom for people who don't live with you all the time. See who is and isn't classed as occupying a bedroom.
Classed as occupying a bedroom:
- Adult children in the Armed Forces who live at home, but are deployed on operations
- Fostered children. Foster carers are allowed an extra room if they have fostered a child or become an approved foster carer in the last 12 months
- Children with severe disabilities who cannot share a room. The local council will decide whether they need a spare room or not
- Adopted children
- Students who live away from home temporarily (for less than 52 weeks) and plan to return home
Not classed as occupying a bedroom:
- Children visiting a separated or divorced parent
- Couples who use separate bedrooms because of disability or illness
- Storage of medical equipment used by disabled adults
Who doesn't 'bedroom tax' apply to?
The following people will not have their housing benefit reduced because of their 'spare rooms':
- People who have reached state pension age - or people with a partner who has reached state pension age
- People living in shared ownership properties
- People living in mobile homes, caravans and houseboats
- People living in some kinds of supported accommodation
- Homeless people who are housed in temporary accommodation by the council
- People who don't pay their rent with housing benefit - for example, if you own your own home, pay a mortgage or rent it with your own money
How will disabled people be affected?
Disabled people who live in specially designed or adapted properties may face cuts to their housing benefit if they're classed as having a 'spare room'. However, it might not be affordable, practical or possible for them to move to somewhere else. In this situation, they might be able to claim a discretionary housing payment to help them.
What should I do if I don't agree?
If you disagree with the number of rooms the council says you need, you should seek advice from a welfare benefits adviser.
What if you can't afford to pay 'bedroom tax'?
If the 'bedroom tax' rules affect you, you might be worried about how you'll get by with less money. Remember, though, that you should always prioritise your rent payments. After all, if you fall into arrears you could lose your home.
Have a good look over your budget and see whether there are any savings you could make here and there. There may be tax credits or state benefits that you're entitled to but not claiming. Remember, if you're not very good at budgeting, the thinkmoney Personal Account could do it for you. It can be set up to receive your housing benefit, pay it to your landlord - and then put a certain amount of your own money aside to make up for the 'bedroom tax'. Just talk to one of our Money Managers when you apply to see what they can do. It can also handle other aspects of your monthly budgeting. Click here to learn more about how it works.
However, if you can't see any other option, you may need to consider moving to a smaller home in your area. If there's nothing suitable for you locally, you may have to move out of the area altogether.
Seek advice from a qualified benefits adviser before you make any decisions. They may be able to help you.