What is the Council Tax Reduction Scheme?

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What is the Council Tax Reduction Scheme?

Background information on the scheme, what it does and who it is for.

History

Before April 2013 there was Council Tax benefit.  This was a national scheme funded by the government's Department of Work and Pensions (DWP).  The DWP set the rules but it was operated in each local authority, as in Rother District Council.  It was a means tested benefit for residents on other benefits and very low incomes.  It reduced the amount of Council Tax they have to pay.

In April 2013, the Council Tax benefit scheme was replaced by a new Council Tax Reduction Scheme. 

The Council Tax Reduction Scheme is a local scheme, created by the district or borough council rather than the Department of Work and Pensions.  The local authorities can set most of the rules for working age residents.   The scheme has not changed for pensioners.

When the scheme started the government provided funding for the scheme.  The money has reduced each year in line with the reduction in the Revenue Support Grant provided to councils.  From 2019, no government funding will be provided for the scheme.  The public bodies that are funded by Council Tax will pay for the scheme.

The cost of the scheme is spread across Rother District Council, East Sussex County Council, Sussex Police and Crime Commissioner (Sussex Police) and East Sussex Fire and Rescue.  In rural areas there are town and parish councils.  This is because all these organisations are precepting authorities; they can raise money through Council Tax.  The cost is spread between these public organisations based on the proportion of Council Tax the organisation raises.  For more information on proportions and amounts go to Council Tax 2018/19

Who Does it Help?

People can claim a Council Tax reduction if they are on certain benefits or a low income. 

In Rother there are approximately 6,000 households who get a Council Tax reduction.  Of those, 44% are of working age and would be affected by these proposals.  That is roughly 2,600 households.  The remaining 58% are pensioners, who are not affected by our proposals. 

Residents who get Jobseekers Allowance, Income Support and Income Rated Employment and Support Allowance get the maximum level of support (80%).  Other residents, not on these benefits but on a very low income, get a level of Council Tax reduction based on their income and other factors. 

A separate central government scheme is available for people of pension age.  It remains very similar to the old Council Tax benefit.  None of these proposals will affect pensioners.

How Does it Help?

A Council Tax reduction can be claimed in addition to other reductions such as the single person discount.

Residents send in an application form along with evidence of their income, savings and other information such as childcare costs.  Currently, we also take into account the income of their partner and other adults living in the households, this usually means adult sons and daughters.  

The current scheme requires all working age residents to pay a minimum of 20% of their Council Tax.  This means the maximum reduction in a Council Tax bill is 80% of the liability. 

If working age people have savings over £6,000 it will reduce how much reduction they get.  Residents with savings over £16,000 will not get a reduction in their Council Tax bill.

Residents will get a new Council Tax bill showing the new amount to pay.  If their income or other factors change they have to tell us and we have to work out the new amount to pay and send them a new bill.  For some residents this can happen several times a year.

Read more about Council Tax Reduction Scheme elsewhere on our website.

Read about Proposal One

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