11:54 AM, 6th November 2014, About 7 years ago 16
With an eye on the imminent introduction of Universal Credit, the recent a recent discussion – “Is your MP a Landlords champion” – kicked up some interesting points, one of which was the potential loss of tax revenues as a result of Tenants who, instead of passing the housing benefit payments on to their Landlord decide to keep it for their own personal usage. As with several of the respondents I had never considered this facet but was left wondering just how much could be involved.
If one puts any actual figures against such aspects as the number of claimants, the percentage likely to retain the HB money etc, Ministers – and/or their advisers – would undoubtedly dispute these, therefore in order to get a feel as to the possible effects consider the following.
If, for every 1 million claimants, 1% kept the HB money, for every £100-00 rental figure per calendar month the loss to Landlords will be £1 million with a corresponding potential loss in taxes – based on 20% of £200,000 per calendar month.
Assuming I have not made any fundamental error in the above, if one puts some multipliers on the above base figures then we may obtain some vision as to the potential total loss in tax.
Assume, 10 million claimants still allowing 1% who retain the HB monies and an average rent of £400-00 per calendar month – it may be low for some but I am assuming lesser advantaged areas, then the loss in taxation would equate to £8 million in one calendar month.
Given that such monies will be lost in to the black economy one has to question the rationale of paying HB monies direct to Tenants.
It is a fact that many tenants categorically state that they would rather the HB monies be paid direct to their Landlord, similarly many Landlords would prefer such monies to be paid direct to them. This not only has a financial benefit but also, should there be a “problem” with the claimants entitlement etc the Landlord is made aware of this direct from the Council and is able to contact the Tenant to ensure that he/she is providing the necessary information that is required to resolve the problem.
Who knows what the scenario will be when Universal Credit is rolled out to the whole country.
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