How is council tax reduction calculated?
The first step when calculating Council Tax Reduction entitlement is to work out your applicable amount. Your applicable amount is made up of one or more allowances and premiums. It is also dependent on the circumstances of you and your household members.
If your total income (not including disregarded incomes such as child benefit and disability living allowance) is the same or less than your applicable amount, you will be entitled to the maximum amount of Council Tax Reduction payable to you (subject to non-dependant deductions and capital limits).
If your total income (not including disregarded incomes) is more than your applicable amount, you will be able to claim a reduced amount of Council Tax Reduction.
Where your total income is higher than your applicable amount the difference between the two amounts is called excess income. To calculate a Council Tax Reduction award a percentage of your weekly excess income is deducted from your weekly council tax liability - this is called the income taper. You must pay the difference between your council tax reduction entitlement and your council tax charge.
If you live with other adults, depending on your circumstances and those of the other adults, deductions may be made to your council tax reduction award - these are called non-dependant deductions.
Working Age Council Tax Reduction Scheme Changes from 1 April 2019
There were changes to the council tax reduction scheme from 1 April 2019, which will continue for 2020/21.
Changes to the scheme
- The family premium is removed
- A two child limit is introduced
- The income taper is increased from 20% to 25%
- Tariff income is removed
- A flat rate non-dependant deduction of £5.00 per week is introduced.
- The maximum amount of Council Tax Reduction that can be received is the same as Council Tax Band D. From 1 April 2020 to 31 March 2021 the maximum is £39.47 per week.
These were the first changes made to the scheme since April 2013. The removal of the family premium and the introduction of the two child limit brought the scheme into line with changes made to other welfare benefits by central government.
If you want to know more about these changes, please read below.
Family premium removed
From 1 April 2019 the family premium sum was removed from the calculation.
So, where your income is higher than your applicable amount, more income will be taken into account and Council Tax Reduction entitlement will be less.
Two Child Limit introduced
Before 1 April 2019, the scheme made an allowance for each child you were responsible for.
From 1 April 2019, for new claims, or where you have a relevant change of circumstances you will only receive allowances for up to two children.
A relevant change of circumstances means a child joins your household or your Council Tax Reduction award is reduced to £0.00 for a period of one or more days.
Income Taper increased
To decide how much Council Tax Reduction should be awarded some of your weekly excess income (explained above) is deducted from your weekly council tax charge.
If your total income (not including disregarded incomes) is higher than your applicable amount your award of Council Tax Reduction is reduced.
From 1 April 2019 we take 25% or 25p in every £1 of your excess income into account.
Tariff Income from savings is removed
Before 1 April 2019, if you had more than £6,000 in savings, it would have decreased your award of Council Tax Reduction. For every £250 over £6,000 (or part of thereof) £1 was taken into account as your income.
From 1 April 2019, where you have more than £6,000 no tariff income is taken into account.
The maximum amount of capital that can be held remains at £16,000. If you hold more than £16,000 you will not be entitled to any Council Tax Reduction.
Flat Rate Non-Dependant Deduction introduced
From 1 April 2019 there are two levels of non-dependant deduction where there used to be five, of either £0.00 or £5.00 per week.
Council Tax Reduction capped at Council Tax Band D
From 1 April 2019 the maximum amount of council tax reduction that anybody receives will an amount the same as Council Tax Band D. From 1 April 2020 to 31 March 2021 the maximum is £39.47 per week.
The maximum you will receive will depend on your council tax liability but cannot be greater than the capped amount.
View your details on My Hastings
If you have a council tax reduction and or housing benefit claim you can look at the details of your claim, what has been used to calculate the claim and your payments on My Hastings. It only takes a couple of minutes to create an account and then link your claim under the My accounts section and then you can check the details whenever you need to.
Council tax reduction