What is Council Tax Reduction?


Council Tax Reduction is a discount for Council Tax. The level of discount is based on the income of the household. Currently the maximum discount is 80% of Council Tax for working age households and up to 100% for pensioners.


Why is a change to the Council Tax Reduction scheme being considered?

In April 2013, the Council Tax Benefit Scheme was replaced by a new Council Tax Reduction Scheme. Council Tax Benefit had been funded by the Department for Work and Pensions and supported people on low incomes by reducing the amount of Council Tax they must pay.


The Council Tax Reduction scheme is determined locally by District Councils rather than the Department of Work and Pensions. Although the Government initially provided funding for the scheme, the funding has reduced each year in line with the reduction in Revenue Support Grant provided to councils. From 2019 no funding will be provided for the scheme.


People can claim Council Tax Reduction if they are on certain benefits. The current scheme requires all working age applicants to pay a minimum of 20% of their Council Tax (a maximum level of support of 80%). Applicants in receipt of income based Jobseekers Allowance, Income Support and Income Rated Employment and Support Allowance receive the maximum level of support. Others receive a level of Council Tax Reduction based on their income and other factors.


A separate Central Government scheme is retained for people of pension age and Councils are only able to vary their schemes for people of working age.


Each Council is required to review their schemes each year and decide if they want to make any changes. Before any changes can be implemented, they must be subject to public consultation.


The District Council is proposing a number of changes to its existing scheme and, in line with legislation, we have a duty to consult you and provide you with the opportunity to tell us your views on the proposed changes to our Council Tax Reduction Scheme.

Who will this affect?

Working age households in the District who currently receive or will apply for Council Tax Reduction.

Pension age households will not be affected as Central Government prescribe the scheme.


Are there any alternatives to changing the existing Council Tax Reduction scheme?

We have also thought about other ways to make the administration simpler. These have not been completely rejected (including maintaining the current scheme) and you are asked about them in the Questionnaire, but, at the moment we do not think we should implement them for the reasons given.


We have considered:

1                Continuing with the current scheme

This would mean higher administration costs and scheme costs generally. Not making these changes would significantly increase the administration of Council Tax Reduction. The current scheme will not work effectively with the Government’s Universal Credit system. The multiple changes in Universal Credit inevitably lead to multiple changes in Council Tax Reduction. This would increase the costs for all council tax payers in the District paying towards the scheme.  The decision to increase Council Tax may need to be made by voting in a local referendum.


2               Reduce funding to other Council services to pay for additional administration costs

Keeping the current Council Tax Reduction scheme will mean and increase in administration costs and less money available to deliver other Council services; or


3               Use the Council’s reserves to keep the Council Tax Reduction scheme

Using reserves to fund the additional administration costs would be a short-term option. Once used they will no longer be available to support and invest in other Council services and additional cuts would have to be made in the following years.

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