What is Bedroom Tax And Who Needs to Pay it?

What is Bedroom Tax?

The United Kingdom government, in Apr-13, introduced a tax on additional bedrooms for individuals residing in housing association property. The Bedroom tax, introduced under the Welfare Reform Act 2012, replaced the spare room subsidy. Under the modifications, occupants in social housing can reduce their benefit by 14% if the occupant(s) has one spare bedroom or by 25% if the occupant has two or more spare bedrooms.

Additionally, two youngsters below 16 years of age and of the similar gender are anticipated to share a portion of one bedroom, and the same rule also applies for two children below 10, irrespective of similar gender. On average, an occupant impacted by the bedroom tax loses between £14 a week - £25 a week.

What is bedroom tax?

Also, referred to as under-occupancy charge, the Bedroom Tax is an amendment to ‘Housing Benefit’ claim which means that an individual will be given or will receive a reduced percentage in housing benefit if he/she resides in a council property or housing association that is considered to have one or multiple spare bedrooms. Below mentioned are conditions under bedroom tax:

  • If an individual has one spare bedroom, this will imply that he/she loses 14% of their permitted housing benefit.
  • If an individual has two or additional spare bedrooms, this will imply that the person will lose 25% of entitlement.

For example, an individual’s weekly entitled rent amount is £70 and the person is residing in a 2-bedroom flat as a single member. As per the rules of bedroom tax, if an individual has one spare bedroom, then the ‘entitled rent’ amount will decrease by 14%. Hence, the applicable new entitled rent amount will be £60.20, and this is the maximum Housing Benefit amount an individual will be paying.

Household arrangement One bedroom Two bedrooms Three bedrooms Four bedrooms
Single NA 14% 25% 25%
Couple NA 14% 25% 25%
Lone parent staying with a child or a couple NA NA 14% 25%
Lone parent with two children both above 10 years or a couple NA NA 14% 25%
Lone parent with two boys above 16 years or a couple NA NA 14% 25%
Lone parent residing with a girl aged 10 and boy aged 12 years or just a couple NA NA NA 14%
Lone parent with two boys aged 12 years and 17 years NA NA NA 14%

The bedroom tax/under-occupancy charge will have an impact on individuals residing in social accommodation, who get Housing Benefit and have additional bedrooms in their house than actually required. The reduction in Housing benefit is usually termed as ‘bedroom tax’ and an individual will only be impacted by this variation if he/she gets Housing Benefit. The bedroom tax won’t impact an individual if he/she:

  • Has got the house on rent from a private agency or landlord
  • Is of state pension age
  • Is residing in a home an individual purchased through co-ownership housing
  • Is staying in short-term housing set by Northern Ireland Housing Executive (NIHE)
  • Usually pays the rent amount without any assistance from Housing Benefit

According to the United Kingdom government, the Bedroom tax was proposed to reduce the housing benefit bill and make some space available to assist 300,000 United Kingdom individuals residing in congested accommodation. The Department for Work and Pensions (DWP) defined a benchmark of 30% of tenants residing in social housing to move home by 2017. However, the exemption list includes parents of teenage armed forces personnel and foster carers.

Number of Bedrooms permitted by the United Kingdom Government for families

What makes a ‘spare bedroom’: One bedroom is permitted for every person stated below:

  • Grown-up couple
  • Either one of couple is unable to share a bedroom for the reason of a disability
  • A single individual above 16 years of age (comprising occupants and relatives or friends who stay with the individual)
  • A immobilised youngster below the age of 16 who is unable to share a bedroom with anyone due to his/her disability
  • Two youngsters of similar sex below 16 years of age
  • Two youngsters of one or the other sex below 10 years of age

Bedroom tax was primarily introduced to inspire council residents residing in houses which are too huge according to their needs and there is a possibility to shift to a lesser-in-size property, thus releasing space for large clans residing in small accommodations. The bedroom tax is applicable for residents staying in social housing i.e. a property controlled by a housing association or a council, and they claim housing benefit. Basically, if an individual is of working age and has bedrooms which are more than what is permitted by the rule, hence, the tax applies.

Exemption from Bedroom Tax

If an individual hasn’t applied for housing benefit since the past year, the tax will not be applicable for the initial 13 weeks of claim. A number of housing types also fall under the preview of exemption and this includes mobile homes, temporary accommodation, and houseboats. Additionally, if an individual has a child with disability, in armed forces or fostered then in such a scenario an individual might be eligible to an additional bedroom:

  • Adopted child/children
  • Adult child/children who are in the Armed Forces, deployed on operations, but stay at home
  • Children with austere ill health who are not in a position to share a room. In such a scenario, the local council will select in case a spare room is required or not
  • Foster carers are permitted an additional room if a family has fostered a child or turned into an sanctioned foster carer in the past 12 months
  • Students who stay away from home for the time being (for a period of less than 52 weeks) and plan to come back home

Definition of Bedroom

There is no specific Government regulations around the definition of a bedroom. Its on the landlord’s discretion to choose, depending on the property size and what is stated on the occupancy contract. However, there is no difference amongst a single bedroom or double bedrooms – both are treated as a bedroom!

The following are not categorised as occupying a bedroom:

  • Child/children visiting a divorced or detached parent
  • Married individuals who use different bedrooms due to illness or disability
  • Storing medical equipment for use by disabled grown-ups

What happens if an individual can’t pay Bedroom Tax?

If bedroom tax rules have impact on an individual, he/she might be concerned about managing to pay tax with less money. It is imperative to ensure that an individual always gives high priority to his/her rent payments as any amount outstanding can result in an individual losing their home. A tenant should have a good look over his/her budget and compute any savings he/she will make – there might be a scenario where an individual is eligible for state benefits or tax credits and is not claiming them.

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About the author
Blog Author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.

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About the author
Blog Author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.


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