Name: What is Council Tax Reduction?
Description: What is Council Tax Reduction?

What is Council Tax Reduction?

Council Tax Reduction is a local scheme to help people on a low income, in or out of work, or in receipt of state benefits.  The amount you can receive depends on your income and circumstances and is shown as a discount on your Council Tax rather than being paid as a benefit.

Pension Credit age people

For applicants of pension credit age, the Government have prescribed the rules we must use to calculate Council Tax Reduction. Please be aware the name of the scheme has changed - it was previously known as Council Tax Support.

Working age people

For applicants of working age, the current local scheme adopted by this Council calculates your support and then reduces your entitlement by a percentage.  Currently that percentage reduction is 20%, which means all working age people must pay at least 20% of their council tax charge.

Following an 8 week public consultation last summer, and having considered the responses and assessed the impact of the proposed changes on individuals, the Council have approved a new scheme for working age. This will be known as the local Council Tax Reduction scheme (currently known as the Council Tax Support scheme) and will come into effect from 1 April 2019.

This new scheme for working age is an income banded scheme and will assess the maximum level of Council Tax Reduction based on the net income of the applicant, and their partner if they have one.

The income bands are set out in the table below:

Weekly Income levels

Band

Discount %

Single person

Couple with no children or young person

Couple or Lone Parent with one child/young person

Couple or Lone Parent with two or more children/young persons

1

80

Passported Benefit

1

80

£0 - £79.99

£0 - £119.99

£0 - £179.99

£0 - £239.99

2

60

£80 - £129.99

£120 - £169.99

£180 - £229.99

£240 - £299.99

3

40

£130 - £179.99

£170 - £219.99

£230 - £279.99

£300 - £349.99

4

20

£180 - £259.99

£220 - £299.99

£280 - £379.99

£350 - £449.99

5

0

£260+

£300+

£380+

£450+

The basics of the scheme for working age people are:

  • The maximum discount that can be paid is 80%. Therefore, people liable for council tax must pay at least 20%.
  • Anyone with savings above £6,000 will not qualify.
  • Applicants will receive a discount of 80%, 60%, 40%, 20% or no discount, depending on the level of their income and the income band they fall into.
  • Those receiving a passported benefit – ie Income Support, Jobseeker’s Allowance (income-based) or Employment and Support Allowance (income-related) will automatically be placed into Band A (ie 80% discount).
  • The income ranges above are weekly amounts.
  • Examples of income are earnings, self-employed earnings, tax credits, pensions, student grants/loans, Jobseeker’s Allowance (contributions), Employment and Support Allowance (contributions).
  • Net weekly income will be taken into account when calculating Council Tax Reduction.
  • Net income means once income tax, national insurance and half of any personal pension is deducted from a person’s earnings.
  • To support incentives to work, £25 per week will be disregarded from the applicant’s net earnings and only one disregard shall be applied per claim.
  • Income from Disability Living Allowance, Personal Independence Payments, Armed Forces Independence Payments, Child Benefit, Child Maintenance, and War Disablement Benefits will continue to be disregarded when calculating Council Tax Reduction.
  • Income from Carer’s Allowance will also be disregarded in full.
  • Where the applicant would have been entitled to any disability premium (eg child disability, enhanced disability or severe disability) under any previous scheme, the amount equivalent to the value of the premium (as determined under the Housing Benefit Regulations 2006) shall be disregarded from the applicant’s total net income.

Full details of the scheme are available below.

Details of the Local Council Tax Reduction Scheme for 2019/20 PDF, 446.68 KB

Details of the Council Tax Support Local Scheme for 2018/19 PDF, 1793.81 KB

Last Updated: 11th March 2019 Print Link