Whether you are a homeowner or a tenant, you can take in a lodger to share your premises; however, there may be some financial consequences of this decision. Through this article, we aim to discuss whether or not lodgers pay council tax and if adding a lodger to your home affects your existing council tax bill. Additionally, we will also explore other situations in which council tax, discounts and exemptions apply. 

Do Lodgers Pay Council Tax?

No lodgers do not pay council tax if they live in someone’s house. However, single occupancy residents who have let out their house to lodgers will lose their 25 percent discount in most cases if they share their home with a lodger. The only exception to this is if the lodger is:

  • a full-time student
  • below 18 years of age
  • paying a full council tax at another residence (Mon – Fri lodgers)
  • receiving benefits 

However, if a house is occupied by two adults, there will be no difference to their council tax bill with the addition of a lodger.

For a better understanding of how council tax is applied on residents, below are some examples: 

  • Two adults who live in the same house qualify to pay full council tax; they may share the bill. 
  • If a single adult is living in a property by themselves, they may be eligible for a 25 per cent reduction in the bill. The same rule applies if an adult is sharing the premises with one or more individuals under the age of 18 years.
  • A 50 per cent council tax benefit becomes applicable if all the residents of the household are under 18 years of age. Complete exemption or a 100 per cent discount is applicable if all the residents of the said premises are full-time students.
  • Individuals on a low income or those receiving other forms of public support qualify for a 100 per cent discount on their council tax bills. To apply for this exemption, claimants may be homeowners or tenants; they may either be unemployed or working. 

There are eight valuation bands for council tax bills that run across A to H, with Band A assigned to properties with the lowest value and increasing up to Band H for properties with higher values. It is on the basis of this assigned band, that the amount of council tax is decided. Therefore, the higher the valuation band, the higher the council tax payments.

In addition to a property’s value, the Valuation Office Agency considers the following factors when assessing a property for valuation purposes:

  • location
  • size
  • character
  • layout
  • purpose or use

How Much Is Council Tax For One Student And One Professional?

If a professional adult (above the age of 18 years) is living with a full-time student, the rate of council tax that applies will be based on single occupancy status with a council tax discount as the full-time student will be exempt from council tax payments. To qualify as a full-time student, an individual should be able to comply with the following conditions:

  • The student is involved in a minimum of 21 hours of study each week
  • The course undertaken by the student should last a minimum of 12 months

If the student is in an A levels or below course and is aged below 20 years of age, the following conditions will apply:

  • The student should be involved in a minimum of 12 hours of study each week
  • The course undertaken by the student should last a minimum of 3 months

In case of part-time students, there can be no exemption from council tax bills; however, a discounted rate will apply. The amount of council tax due will depend on the valuation band assigned to the property they occupy as well as its market value. 

If someone is not a student and is seeking a reduction on their council tax bill, the claimant must either be on low income or claim benefits through a government-supported program.

How Is Council Tax Calculated?

The Valuation Office Agency (VOA) initially assesses the market value of properties according to their worth in 1991 (this is a uniform practice across the UK) to assign them a valuation band. If your property has been constructed after 1991, the market value of similar properties at that time will be applied.

Below is a detailed classification of council tax rates according to their valuation bands:

Council Tax BandProperty Value
AUp to £40,000
BOver £44,000 and up to £52,000
COver £52,000 and up to £68,000
DOver £68,000 and up to £88,000
EOver £88,000 and up to £120,000
FOver £120,000 and up to £160,000
GOver £160,000 and up to £320,000
HOver £320,000 

Who Is Exempt From Council Tax?

Should someone fall under any of the below categories, they will be considered as exempted from having to pay their council tax bills:

  • the resident lives in a care home and not their own home
  • the resident is under hospital care
  • the resident is living somewhere else; providing care to another person
  • the resident is in the armed forces 
  • the resident is in prison (not for non-payment of council tax bills)
  • all the residents are full-time students
  • all the residents are under 18 years of age
  • all the residents are mentally impaired

Then there may be situations that are property-centric; making the premises ineligible for council tax to be applied. These may include:

  • the property is used for charity work
  • it is an annexe to the main property
  • the property is repossessed
  • it has been purchased to be demolished

What Happens If Someone Is Unable To Pay Their Council Tax?

If an individual is struggling to pay their council tax bills, they must contact their local council office immediately. The first convenience extended towards such individuals is that the local council may allow them to pay their council tax bill in 12 instalments as compared to the standard 10. This reduces the amount that is due each month; thus reducing the size of each payment.

If this is not a workable solution, the council office may offer the individual a one time discount so that future payments are made easily.

If someone is low on income or receiving other forms of state benefits, they may not be eligible to pay their council tax in full.

However, if someone deliberately fails to make their council tax payments and does not inform the council of their situation, they will be sent a reminder notice to clear their payment within the next 7 days. Failure to do so may impose the full payment of the annual tax on the individual.

Continuing to miss council tax payments may call for legal action from the council’s side as they will be authorised to send a liability order (a legal demand) to clear your unpaid dues. All legal fees incurred for this process will be added to the defaulter’s council tax bill.

As a final resort, the council office can send enforcement agents/bailiffs to seize the property of the defaulting party. If someone does not have a good reason to default on their council tax payments, they may be sent to jail for 3 months. 

What Is A Single Person Discount?

If you live alone or are the only adult in the household, you are eligible for a 25 per cent discount on your council tax bills (irrespective of your income or savings). This is a single person discount on council tax. To avail of this discount, you must inform your local council office of your circumstances and apply for council tax reduction so that your bills may be adjusted appropriately.

The amount of council tax reduction that a resident can qualify for depends on the following factors:

  • The area in which they live as each local council has its scheme.
  • Claimant’s circumstances; including their income, the number of children, any other benefits that may be receiving.
  • Total household income; this includes the joint incomes and savings of couples.
  • If there are children living in the house.
  • The number of other adults in the house.

Conclusion:

From this detailed discussion on the application and liability of paying council tax bills, it is apparent that lodgers are not liable to pay council tax bills even if the addition of a lodger increases the council tax of a previously single occupant of a house. To adjust for this increase in expense, single occupants may consider building in the added council tax expense within the rent to be charged from the lodger. However, if the lodger is a full-time student, below 18 years of age, paying council tax at another property or on benefits, there will be no impact on the resident’s council tax bill with the addition of a lodger.

FAQs: Do Lodgers Pay Council Tax?

Will taking in a lodger affect your council tax?

Unless the lodger you take in is under 18 years of age, a full-time student, paying council tax at another property or on benefits, taking them in will increase your council tax bill if you were on a single occupancy discount for council tax. However, if two adults occupy a house, they are paying the full rate of council tax and taking in a lodger does not affect their bill.

Do you pay council tax as a student?

If you are a full-time student who has undertaken a course for at least one year and are studying for 21 hours or more per week, you will be exempt from council tax bills. In case you are a part-time student, you will be able to qualify for a discounted rate of council tax and will have to pay a nominal bill.

Can you let your family live in your house rent-free in the UK?

Yes, you can let your family live in your house rent-free in the UK. However, if any of you claim benefits (including council tax support), these will be reduced as the DWP may consider their income as a joint income with yours. Similarly, sharing a rent-free accommodation with you will not exempt your family members (who are adults) from council tax payment.

Can I pay rent to my mother?

Yes, you can pay rent to your mother if you share a house with them and she owns the property. However, if either of you is claiming benefits, you must have a formal tenancy agreement in place so that your benefits claim remains intact.

How do I avoid council tax in the UK?

Council tax is a mandatory payment in the UK; therefore, you cannot avoid it on purpose. However, you may be exempt from council tax bills under certain conditions, which includes living in a care home or hospital, living elsewhere to take care of someone, being under the age of 18 years.

References:

How-taking-in-a-lodger-can-affect-your-council-tax/

Should-lodgers-pay-council-tax

Renting-a-home/subletting-and-lodging/lodging-index/taking-in-a-lodger

Do students have to pay council tax?

Council tax for students – Citizens Advice

Council Tax: Who has to Pay – GOV.UK

Council Tax: Discounts for full-time students – GOV.UK

Money off council tax for students and people who live with students

How to get student council tax exemption

How domestic properties are assessed for Council Tax bands – GOV.UK

Council Tax: Paying your bill – GOV.UK (www.gov.uk)

Paying your Council Tax (merton.gov.uk)

Council tax bills can be spread over a year from April (moneysavingexpert.com)

Council Tax Reduction – Who can apply?

Council tax exemptions

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John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.