Who Pays Council Tax When You Are Renting A Room?
If you are renting a room in the UK, it is important to understand who is responsible for paying the council tax bill. This post will provide an overview of the laws and regulations related to renting a room and who is liable for the council tax bill. Additionally, we will also discuss council tax liability based on the tenant’s circumstances as well as its responsibility if you are renting a room to a lodger.
Who Pays Council Tax When You Are Renting A Room?
Who pays council tax when renting a room depends on the circumstances as well as the living conditions. Generally speaking, when a tenant (or tenants) rent a room, the landlord will be responsible for council tax payments; even if the tenants share common spaces such as a kitchen or a bathroom.
This is called a multi-occupant property; commonly termed a House in Multiple Occupation or HMO. This kind of living arrangement limits the responsibility of tenants to the room that they rent. It also frees them from the responsibility of council tax payments and puts the entire responsibility of council tax payment on the landlord.
While a regular house or flat can be termed as an HMO, strictly speaking, if someone lives in either of the following residences, they are living in an HMO and are not bound to pay council tax:
- homes shared by people who aren’t related to each other
- halls of residence
Another factor to be considered here is the renter’s age. Council tax is due on adults only. Therefore, if a renter is younger than 18 years, they are not bound to pay council tax. Similarly, if you rent a room to a full-time student, they are exempt from council tax payments and should not be expected to contribute to them.
On the other hand, if a group of friends decide to rent a place on a joint tenancy basis, and then divide the rent among themselves for each room they occupy, the responsibility for council tax payments will be due on them (and not the landlord).
If you are renting a room in a property where you will continue living as well, you will be taking in a lodger and not a tenant. This means that while they will pay the rent for the room that they occupy, they will be sharing some common spaces with you.
Under such circumstances, a lodger will not be responsible for council tax payments as it will be the sole responsibility of the landlord. However, some landlords add the council tax that they think lodgers should contribute towards their rental payment; making the rent slightly higher than others.
While permitted occupiers are household members who may share the premises with a tenant and are not liable for rental payments or council tax payments, some permitted occupiers prefer to share housing costs in ways that they can. If you have a permitted occupier living with you, they are not liable to pay the rent of the room they occupy (even if they choose to pay you for it) or even council tax.
Who Pays Council Tax When Renting A Room Under The Rent A Room Scheme?
The landlord or tenant who is renting out a room under the Rent a Room Scheme will be responsible for paying council tax.
If an owner-occupier or tenant wishes to avail of the Rent a Room Scheme, they will be required to rent out a furnished room in their main residence. In this case, they will be taking in a lodger and not a tenant. Therefore, the owner-occupier or tenant will remain responsible for council tax payments if they rent a room under this scheme.
The main purpose of the Rent a Room Scheme is to provide an additional and tax-free source of income to property owners and tenants. It allows them to take in a lodger and earn up to £7500 tax-Free rental income.
However, they will need to remain mindful of the fact that while the Rent a Room Scheme allows homeowners and tenants to earn through rental incomes, individuals who were living alone before availing of the scheme and taking in a lodger will lose their 25% single-person discount on council tax.
Can You Include Council Tax When Renting A Room?
Yes, landlords can (and often do) include council tax when they are renting a room. In cases of more than one tenant renting out rooms in a property, it would be convenient for the landlord to divide the council tax among each tenant and add it to the rental amount. In this way, the tenants will contribute towards the council tax due on the property without increasing the landlord’s expenses.
However, there are two points to be considered here:
- If a landlord includes the council tax in the rental payment, the amount of rent that they charge may be higher than other similar properties and can discourage potential tenants.
- You can only add the amount for council tax to a tenant’s rental payments but not that of a lodger as they are exempt from council tax payments.
In either case, if you wish to include council tax when renting a room, you should inform the tenant(s) in advance and mention this in the tenancy agreement.
If you are renting a room in the UK, the person who owns or rents the property is responsible for paying the full amount of council tax. This means that if you are living with other people who are also paying rent, the landlord or tenant is liable for the council tax.