Council Tax Reduction scheme review

Consultation open from 26 July 2022 to 18 September 2022.

People of working age on a low income or who claim benefits can request to pay less Council Tax – we can reduce bills by up to 100% depending on individual circumstances. This scheme is called Council Tax Reduction.

Pensioners follow a prescribed national scheme that is not subject to local control.

Have your say

We are reviewing the local scheme for working-age people and want to know whether you agree with how we propose to run it in 2023. Our short survey will ask you for comments about various aspects of the scheme.

• Council Tax Reduction scheme 2023 to 2026 survey

About the Council Tax Reduction scheme

The scheme that we adopted, in 2013, was based on the previous Council Tax Benefit scheme and worked well alongside Housing Benefit. But when Universal Credit started replacing housing benefit, and six other ‘legacy’ benefits in 2018, it became clear that the scheme did not work well alongside Universal Credit.

To resolve this problem, we introduced a second Council Tax Reduction scheme in 2020, moving households that receive Universal Credit to a new ‘banded’ scheme. Recipients’ Council Tax bills are reduced on different amounts depending on how much they earn. Households that do not receive Universal Credit remain on the 2013 scheme.

The scheme uses data from the government, removing the need for an application to be made and reducing the burden of supplying details of Universal Credit changes. Claims are automatically backdated to when the recipient began receiving Universal Credit.

We have received no challenges or complaints about the scheme or its application.

Council Tax Reduction scheme for people who receive legacy benefits

We do not propose to make any changes to this scheme. It has worked well since it was introduced in 2013 and works well with the legacy benefits.

We will continue the current scheme in line with Housing Benefit allowances, premiums and increases in social security benefits.

Council Tax reduction scheme for people who receive Universal Credit

Income bands

Since 2020, the income bands and the amount recipients must contribute have increased each year in line with the consumer price index (CPI).

During the coronavirus pandemic and the cost-of-living increases, the CPI has become a less reliable figure, causing an increase in contributions where wages have not kept pace with the index.

We propose to change the bands so contributions are based on the national minimum wage, with contributions similar to those listed below. We will revise these draft contributions with more accurate modelling after this consultation ends.

• Earnings less than £77 per week: No contribution
• Earnings of £77 to £140.59 per week: Contribution of £6.09
• Earnings of £140.60 to £210.89 per week: Contribution of £13.52
• Earnings of £210.90 to £281.19 per week: Contribution of £20.55
• Earnings of £281.20 to £351.49 per week: Contribution of £35.22
• Earnings of £351.50 to £657.55 per week: Contribution of £52.08
• Earnings of £657.56 and above per week: Full contribution

We want to keep a fairly small number of bands, to avoid the likelihood of moving between them after a small change in income, which would lead to rebilling and uncertainty of entitlement. The current scheme encourages increasing hours for workers at the bottom or the middle of each band, which will not change their Council Tax Reduction entitlement.

After this reset of the band parameters and contribution levels for 2023/24, we plan to reintroduce uprating according to the consumer price index in 2024/25.

For any further information, please view the document attached below.