Council Tax Reduction Scheme in detail
If you are on a low income you may be entitled to help with your Council Tax bill. This is called a Council Tax Reduction (also known as Council Tax Support). The Council Tax Reduction Scheme (CTR) replaced Council Tax Benefit in April 2013.
The rules for people who are pension age are different to the rules for working age people.
- Summary of Rules
- What is the Maximum Council Tax Reduction that can be awarded?
- Do any working age people get help with up to 100% of their bill?
- What happens when a person’s income is more than the amount the rules say they need to live on?
- What about people receiving Universal Credit?
- What are the income and capital rules?
- Is any income ignored?
- What are the rules for self-employed people who are earning less per hour than the minimum wage?
- How much are other adults living in the home expected to contribute?
- Can people from abroad and students apply for a Council Tax reduction?
- Where can I get more information?
- The applicant and/or partner must be the person named on the Council Tax bill.
- Capital/savings must be less than £16,000 if they are of pension age or under £6,000 if they are of working age, under Pension Age.
- The applicant must be on a low income.
Anyone who is receives any or the following benefits is considered to be on a low income:
- Income Support
- Guaranteed Pension Credit
- Income based Jobseekers Allowance
- Income related Employment & Support Allowance
- Universal Credit - but see special rules
- If a person is not receiving one of the low income benefits mentioned above, then we use standard allowances (DOC, 221KB) to work out the minimum amounts a person or family need to live on in a week. These amounts vary depending on the circumstances of the applicant and their family. The total amount a person / family needs to live on is called the Applicable Amount. We then compare a person/families income to the Applicable Amount and a judgement is made as to whether or not you still qualify for the Council Tax Reduction Scheme (CTR), or how much council tax they will still need to pay.
- For every £1.00 the applicant has in income over the Applicable Amount, they are expected to pay £0.20 in Council Tax.
- The maximum amount of CTR that can be paid to most working age people is 80% of the bill. For pension age people it can be up to 100% of the bill.
- Other people in the home may be expected to contribute to the Council Tax.
Working age applicants on a low income can get help with up to 80% of the cost of their Council Tax bill. They will therefore have to pay at least 20% of their Council Tax. On average, this means £15 a month.
People who have reached pension credit age (pensioners) can get help with up to 100% of the cost of their Council Tax.
Some people of working age, who the Council believes are vulnerable, can also get help with up to 100% of the cost of their Council Tax. These people are either:
- Receiving War Pension, War Widows Pension or War Disablement Pension; or
- Under 22 years old and formerly in care (care leavers); or
- Diagnosed as terminally ill and it is not unlikely that death could occur within 6 months; or
- Have a mental health condition that significantly affects their ability to manage money and they do not have
- a partner who is able to deal with the bill; or
- someone else who looks after their finances for them.
You will need to provide evidence from a health or social care professional that you meet any of the above criteria. Our Mental Health Evidence Form (PDF, 39KB) can be used for this purpose. As long as we have permission we can contact a chosen professional on the applicant's behalf if this is something you would like us to do please complete a Consent Form (PDF, 37KB).
When working out a Council Tax Reduction we need to establish if the applicant has income that is greater than the amount that the rules say they need to live on (Applicable Amount).
The amount that a person is expected to live on is determined by a set of allowances (DOC, 208KB) that vary depending on the circumstances of the applicant and their family.
- The applicant is allocated an allowance, a single rate or a couple rate. The allowance is also dependent on their age. If they have a partner the allowance depends on the age of the older partner, regardless of whether that person is the applicant.
- Allowances for each dependant child or young person are added, along with a family premium.
- Additional allowances or premiums can be added if any of the family are disabled, or are a carer.
The allowance and premiums are added together to arrive at the amount the applicant and family need to live on each week. This is called the Applicable Amount.
From 1 April 2021, the Applicable Amount for a lone parent age at least 18 with 2 children would be:
- £74.70 single adult allowance
- £68.60 allowance per child (£137.20)
- £17.65 family premium (but only on claims that started before 1 April 2017 and where the first child was born before 1 April 2017)
Total Applicable Amount of £229.55 weekly.
Where an applicant has income that is more than the Applicable Amount, the amount of help they can get is reduced.
For every £1 a person/family has in income over the Applicable Amount they are expected to pay £0.20 in Council Tax.
There are special rules for people who are receiving Universal Credit.
People wishing to apply for a Council Tax Reduction can apply at the same time as they claim Universal Credit. There is a question on the Universal Credit application form, which asks if you wish to apply for help with your council tax. If you are liable for council tax at your address (i.e. the person who is named on the bill) you should answer yes. The Department for Work & Pensions (DWP) will then tell us if you are entitled to Universal Credit and give us the details of your income.
- If you are entitled to Universal Credit and a Council Tax Reduction, the DWP will tell us automatically every time your income or family details change. We will then work out if your council tax reduction needs to change. If it does, you will get new council tax bill.
- if you are entitled to Universal Credit but in any month you are not entitled to a Council Tax Reduction, for example because your earnings are higher than usual or you have capital over £6,000, the DWP will stop giving us any information about you and your circumstances. This means that we will not automatically know if your wages go down, your capital reduces below £6,000 or your family gets larger and unless you tell us yourself, you may miss out on any further help through a Council Tax Reduction, you can apply for Council Tax Reduction online. Please provide a screen print of your latest Universal Credit Assessment from your online Universal Credit account.
If you are already on Universal Credit and move home, you should contact the Council’s Benefits Service directly to let them know you have moved. Information when you move, is not always shared immediately between the Department for Work and Pensions (DWP) and the Council.
If you have told the DWP that you need help with your Council Tax, the DWP will tell us how much Universal Credit you are receiving from them. If for any reason they don't, e.g., if you have moved here from another area, we will need you to provide us with a screen print from your Universal Credit online account.
The Universal Credit information is used to work out any Council Tax Reduction. We compare the amount the DWP say the person/family needs to live on (maximum Universal Credit amount) to the person/families total income.
If you have over £6,000 in capital you will not be entitled to a reduction. If your savings are less than £6,000, for every £1.00 you have in income over the maximum Universal Credit amount, you are expected to pay £0.20 in Council Tax.
A single person who has no children, and pays a rent of £300 a month, maximum universal credit amount for the month is worked out to be
- Standard Allowance of £344.00
- Housing Element of £300
Total Maximum Universal Credit Amount of £644.00 a month.
They are working and earning £300 a month. This reduces their actual Universal Credit entitlement to £455.00 a month.
Their total income is therefore £755.00 a month (£300 earnings plus £455.00 Universal Credit), which is £111 more than the maximum Universal Credit Amount of £644.00 in this case.
£111 X £0.20 = £22.20. This is how much extra they need to pay in Council Tax each month. This amount is on top of the 20% that most working age people must pay as a minimum.
If their Council Tax bill is £100 a month, they would have to pay a minimum of £20 a month (the 20% minimum payment) plus, in the above example, an extra £22.20 because of their income. i.e. the bill would be reduced to £42.20 a month.
Capital means things like savings, land or property. However, some capital is ignored, for example, personal possessions.
Working age applicants with savings of more than £6,000 will not normally be entitled to a Council Tax Reduction, unless they are receiving;
- Income Support
- Job Seekers’ Allowance (Income Based)
- Employment and Support Allowance (Income Related)
For Pension Credit Age (pensioners) the limit is £16,000.
When a person who has reached the qualifying age for Pension Credit has capital over £10,000, we assumed a “tariff” income from that capital. The figure does not represent interest or the applicant’s actual income. It is an assumed income.
Tariff income is calculated by dividing the amount of the capital over the £10,000 limit by 500. The result is the number of £ to be used as tariff income. If the result is not an exact number you will need to round the result up to the next £.
People, who get;
- Income Support,
- income-based Jobseeker’s Allowance o
- income-related Employment and Support Allowance,
Will automatically be within the income and capital limits for Council Tax Reduction and will qualify for the maximum amount.
People who are on Pension Credit and get the guarantee credit will also automatically get the maximum amount of Council Tax Reduction. People receiving the savings credit only, may qualify for a Council Tax Reduction but it will depend on their income and savings.
Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance and Guarantee Pension Credit are sometimes referred to as passported benefits.
If the applicant is not receiving one of the passported benefits, we need the details of all their income to establish if their income is more than their Applicable Amount.
Not all income is taken into account. For example child benefit is ignored, so is maintenance paid for a child.
If a person is working some of their earnings are also ignored.
Here are some examples of income where some or all of it is ignored.
Earnings, weekly amount ignored:
- Single £30.00
- Lone parent £50.00
- Couple £60.00
- Carers £60.00
- Disabled or long-term sick £60.00
- Special Occupations £50.00
- Permitted earnings higher £143.00
- Single £5.00
- Lone parent £25.00
- Couple £10.00
- Carers £20.00
- Disabled or long-term sick £20.00
- Special Occupations £20.00
- Permitted earnings higher £143.00
- Permitted Earnings lower £20.00
- Additional earnings Disregards** £17.10
If a person is working and has to pay for child care, we will also ignore an amount from their earnings that has to be used to pay for the childcare, up to the maximum amount shown in the table below.
Child Care Costs
- Where one child meets the criteria £175.00
- Where more than one child meets the criteria £300.00
Other Income examples of weekly amounts ignored
- Rent from boarders: £20.00 plus 50% of rent over £20
- Charitable payments: In full
- Child Benefit: In full
- War disablement and pensions: In full
- In Work Credit: In full
- Student Loan: 10.00
- Maintenance for Child: In full
- Rent from subtenants: £20.00
- Widowed Parents Allowance: £15.00
- Disability Living Allowance: In full
- Personal Independence Payment: In full
For the first year after becoming self-employed or becoming entitled to a Council Tax Reduction we will use the income actually declared as being received from self-employment. After a year, we may assume an income from self-employment based on the minimum wage.
An assumed self-employed income may be taken into account where;
- a self-employed person, would otherwise be required to be seeking work for the purposes of claiming Job Seekers Allowance.
- The income they are declaring from earnings (amalgamating both self-employed and employed earnings) are below the threshold
- The person is in gainful self-employment.
A person will be exempt from this rule during a start-up period
They will also be exempt if they:
- are a foster parent and currently fostering a child;
- have a disabled child who is entitled to receive the middle or higher rate care component of Disability Living Allowance;
- are a lone parent with a child under 5 years old;
- are a carer receiving care allowance;
- are receiving disability living allowance (DLA) or personal independence payment (PIP) (or whose partner is receiving DLA or PIP);
- are receiving a war pension (or whose partner is a war pensioner);
- are pregnant and either:
- receiving maternity allowance or;
- the baby is due in less than six weeks and for up to two weeks after the actual birth or;
- there is a serious risk to her health or the health of the unborn child if she does not refrain from work.
An applicant or their partner is in gainful self-employment if they are self-employed, in expectation of profit, for an average of 16 hours or more each week.
A start-up period is 12 months from;
- The date gainful self-employment began; or
- The date Council Tax Reduction entitlement began; or
- 1 April 2015
Whichever is later.
A start-up period will not change where a partner who is self-employed makes an application for a Council Tax Reduction in their own right.
Existing cases – transitional provision
Where a person is self-employed on 1/4/15 and in receipt of a Council Tax Reduction on that date, the Start Up period will run from 1/4/15 to 31/3/16.
Linking period: Breaks in CTR, after the start of self-employment, of less than 12 months will be linked and for the purposes of calculating the linking period, will be treated as if the applicant had been continuously entitled to CTR.
Breaks in self-employment of less than 12 months, during a period of CTR entitlement will be linked for the purposes of calculating the Start Up period.
Mr A is receiving a CTR. He becomes self employed on 1/6/2015. His start up period will run from 1/6/15 to 31/5/16.
He stops receiving CTR between 2/11/15 and 4/1/16 as he starts working for an employer. He reapplies and his new entitlement starts 5/1/16. At this point he is not working. He recommences self employment on 8/2/16. His Start Up period end date has not changed and remains 31/5/16.
- The threshold is the hourly minimum wage for 16 hours work.
A notional income will be assumed if their gross earnings from
- all self-employment
- less allowable expenses plus
- gross earnings from any other employment
Is less than the threshold.
The notional income from all their earnings will be assumed to be 16 x the minimum wage for their age less tax, NI & 50% any pension contribution declared.
Increase in the minimum wage
Any increase in the minimum wage may be ignored for up to 30 weeks.
If the applicant has other adults living in the home, these adults may be expected to contribute towards the Council Tax. These other adults are called 'non dependants'.
A Council Tax Reduction is reduced by the amount that the non dependants are expected to contribute. The amounts are set amounts depending on the circumstances of the non dependant. Higher deductions apply where the non dependant is working at least 16 hours.
Council Tax Reduction Non Dependant Deductions from 1 April 2021 to 31 March 2022
No deduction will be made where:
- the applicant or partner is blind or
- receives one of the following benefits:
- Attendance Allowance
- The care component of Disability Living Allowance
- The daily living component of Personal Independence Payment
- an Armed Forces Independence Payment.
- No deduction will be made if the non-dependant is;
- A Full-time student in term time or
- Less than 18 years old.
- No deduction will be made if the non-dependant receives any of these benefits;
- Pension Credit
- Income Support
- Jobseekers Allowance (Income Based)
- Employment & Support Allowance (Income Related)
- Universal Credit and has no income from earnings
- If none of the above apply and a non-dependant is working 16 hours a week or more, the amount of the deduction will depend on their gross income. The weekly deductions are as follows:
- gross income less than £217.70 - deduction is £4.05
- gross income between £217.70 and £376.99 - deduction is £8.30
- gross income between £377.00 and £469.99 -deduction is £10.40
- gross income £469.00 or more - deduction is £12.45
- If none of the above apply, the weekly deduction is £4.05.
To receive a Council Tax Reduction the applicant:
- Must be resident in the UK at the address they are claiming from.
- Must have recourse to public funds if from abroad.
- Most Europeans Union citizens can only claim if they have been granted EU Settled Status
- Full-time students cannot usually claim unless they are disabled or have children.
To find out more, such as whether you might be eligible and how to apply, please use our frequently asked questions Frequently Asked Questions or see Related Links.
The full scheme can be found by clicking on the link below.
Details of last year's scheme can be found by clicking on the link below.
Information on what do if you do not agree with the calculation of your Council Tax Reduction can be found on our page Appealing against your Council Tax Reduction
Discretionary Council Tax Reduction
The Council Tax Reduction Discretionary Fund is a means by which Council Tax Payers who are in financial need can receive assistance that cannot be met by the main Council Tax Reduction Scheme.
This scheme has two objectives:
1. Enable the council to consider a reduction in the council tax for a dwelling to applicants who meet the qualifying criteria as specified in the policy.
2. Meet the needs of vulnerable people and make a contribution to the alleviation of child poverty by:
- Easing severe financial pressure on families and individuals who circumstances are such that they incur essential additional day to day living costs, which they are unable to meet from their income.
- Helping local people through personal crises and difficult events.
- Ensuring that pensioners receiving a war pension are not adversely affected financially by the abolition of Council Tax Benefit.
- Supporting young people leaving care in the transition to adult life.
- Encouraging and sustaining people in employment.
More information can be found on the Discretionary Council Tax Reduction page.
Last Updated: 1 October 2021