What is bedroom tax and how does it affect your benefits?

If you live in social housing, having a spare room might seem like a win – but it could end up costing you. That’s exactly what happens with the bedroom tax, a controversial policy that can take people by surprise just as they’re struggling to make ends meet.

The bedroom tax, officially known as the under-occupancy charge, means the government pays you less in benefits if they think your home has more bedrooms than you need. If you live in council or social housing and have a spare room, your universal credit or housing benefit might be reduced and leave you with more rent to cover from your own pocket. It doesn’t apply if you rent from a private landlord.

The bedroom tax policy, sometimes referred to as the removal of the spare room subsidy, came into effect in April 2013 as part of the then-government’s welfare reforms to encourage people to move to smaller properties and free up larger homes for families in need. 

But even in 2015 – before the UK’s housing crisis accelerated – social landlords said there weren’t enough homes available for people to downsize to. Within two years of the policy being introduced, three-quarters of people hit by the bedroom tax reported having to cut back on food to stay afloat financially.

Who pays bedroom tax?

The bedroom tax applies to people who live in homes provided by councils or housing associations, and who pay their rent (in part or in full) through housing benefits or the housing element of universal credit. 

Whether or not you have to pay the bedroom tax depends on the size of your home and how many people live with you. The government sets rules on what they consider to be the necessary number of bedrooms for your household – a single person living in a two-bedroom flat or a couple living in a three-bedroom house might be considered to have a spare room, which could ultimately mean their benefits payments shrink.

In Scotland, you’ll pay the under-occupancy charge like elsewhere in the UK, but you likely won’t have to cover more rent by yourself. 

The Scottish Government pledged to mitigate the bedroom tax starting in 2017 by funding a different benefit – discretionary housing payments – to cover the shortfall for anyone who has to pay the bedroom tax, effectively cancelling out the impact of the charge on people’s finances. A similar policy applies in Northern Ireland.

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Around 100,000 households are charged the bedroom tax in Scotland, according to research from the House of Commons Library, where people are more than twice as likely to be subject to the charge compared to people in England.

It’s a pricey policy, costing Holyrood more than £70 million in 2023-24 alone. But thousands of low-income families are being “pushed into poverty” by “punitive” rules like the bedroom tax, SNP deputy Westminster leader Pete Wishart said ahead of the Autumn budget.

It’s a “cruel policy that punishes the poorest households simply for living in their families homes,” he added.

As of 2022 – when Westminster figures were released in a written answer from then-work and pensions minister Baroness Stedman-Scott – 396,100 households were paying the bedroom tax for having one spare room, while 84,00 were paying it for having two or more spare.

Who is exempt from paying the bedroom tax?

Although the bedroom tax affects many people, certain groups are exempt from it. Knowing if you’re in one of these groups could save you from the extra cost and help you keep your full benefits.

If you or someone in your household is disabled, you might be able to avoid the bedroom tax. This often applies if your physical or mental health condition means you need extra space for medical equipment, can’t share a room due to your health condition or need a room for a live-in carer. 

You’ll need to provide evidence such as a medical assessment or supporting documents from your doctor. You also have to be receiving one of several benefits: the daily living element of personal independence payment (PIP); the middle or higher rate of disability living allowance (DLA); the higher rate of attendance allowance; armed forces independence payment; the standard or enhanced rate of the daily living element of adult disability payment; or the middle or highest rate of the care element of child disability payment.

Disabled people should also be prioritised by their local authority when applying for discretionary housing payments, which are awarded on a case-by-case basis, when in need of financial support.

Pensioners are exempt from the bedroom tax too. If you have reached state pension age, you won’t be affected by the charge or have to worry about downsizing from a home you might have lived in for years. However if you claim universal credit as a couple and only one of you is over 60, you might still have to pay it.

Foster carers are allowed an additional room without seeing benefit deductions, even if they don’t have a child placed with them at that time. Similarly, those on carer’s allowance might qualify for an exemption, particularly if they care for someone in their household who is disabled.

People who have experienced domestic abuse are sometimes exempt too, as long as they can provide evidence.

If you think you might qualify for any of these exemptions, it’s worth checking with your local council or housing provider to ensure you’re not missing out on the support you’re entitled to.

How much is bedroom tax?

The reduction in your benefits depends on how many spare bedrooms you have. The proportion of your rent that can be paid through social security reduces by 14% if you have one spare bedroom, or by 25% if you have two or more spare rooms. 

So if your rent is £500 per month and you have one spare bedroom, your benefits for housing would go down by £70 and you’d only get £430 in support. 

Can you challenge a bedroom tax decision?

If you believe the bedroom tax is unfairly applied to you, or if your personal circumstances mean that you need all of the bedrooms in your home, you can challenge the decision. 

You need to contact the Department for Work and Pensions (DWP) and request what’s known as a mandatory reconsideration – essentially asking them to take another look at your case and all the evidence. Appealing to a tribunal is an option too, but you have to have asked for a mandatory reconsideration first.

Be aware that there’s no guarantee the government won’t look at your benefit claim and decide to reduce it further, so make sure that you’ve handed over as much comprehensive evidence as you can.

You should request the review within a month from when the initial decision was made, though you can still ask for one later if you can give a good reason for not having done so sooner. This is best done in writing to the address on the letter you’ll have received about the decision, or through your online universal credit account.

If this is refused or there’s no change to the decision, you can then apply for appeal to an independent tribunal.

One option is to request a review of your situation. For example, if you need the extra bedroom for medical equipment or if a disability or health condition requires you to have a separate sleeping space, you can provide evidence to support your case. This might include medical records, letters from doctors, or assessments from social workers that demonstrate why the extra bedroom is necessary.

Another route, if you need help to pay your rent, is to apply for a discretionary housing payment, which are one-off cash payments handed out by councils to help people facing serious financial hardship. There’s no guarantee you’ll receive one, but if you’re struggling to make ends meet, it’s worth applying. You can apply directly through your local council and they will assess your financial situation to decide whether to give you the payment.

If you’re struggling to stay on top of your finances in general or falling into rent arrears – the sky-high cost of living has rendered daily essentials unaffordable for thousands across the country – there are steps you can take to ease the pressure.

Even if you already claim some type of benefit, it’s important to check whether you’re receiving all the benefits and support you’re entitled to. This could include universal credit or discounts like a council tax reduction. A lot of people also qualify for extra one-off help with energy bills too, like the warm home discount or winter fuel payment. You can use online benefit calculators or get tailored input from organisations like Citizens Advice to make sure you’re getting all the help you’re entitled to.

It’s also a good idea to contact your energy supplier if you’re falling behind on payments –  many providers offer payment plans or hardship funds to help during tough times.

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