Council Tax Reduction Scheme 2020/21

Closed 3 Nov 2019

Opened 12 Aug 2019

Overview

Redbridge Council are considering changes to the Council Tax Reduction Scheme for working age households for 2020/21.

In April 2013, the government abolished Council Tax Benefit and asked local Councils to design their own Council Tax Reduction schemes for working age claimants. Since April 2013, Government funding for the Council Tax Reduction Scheme has reduced year on year. The Council do not pass this full cut on to residents and has chosen to subsidise the scheme to provide the current level of support. 

Why are we changing the scheme?

The current Council Tax Reduction Scheme is based on the former Council Tax Benefit scheme which is means tested. A means tested scheme considers the income of the claimant (and partner) and compares this against an “applicable amount” appropriate to the size of the household. The applicable amount is set by central government and is based on the size and health conditions of the household.  A taper is then applied to the claimant’s entitlement to Council Tax Reduction. This is currently 20%, which means that the household must pay 20p towards their Council Tax for every £1 in income they have over their applicable amount.

A means tested scheme is re-active to all changes in income, however small and results in a re-assessment for every change. With the introduction and roll-out of Universal Credit, claims are re-assessed monthly. Each re-assessment generates new entitlement letters and Council Tax bills. This monthly change creates financial uncertainty for residents, can make it difficult for people to budget, and can result in debt problems.

We are proposing that the new scheme is instead based on income bands. There will be no means tested calculation which means that small fluctuations in income will rarely affect entitlement, allowing claimants to budget more effectively. 

Under the proposed scheme there are six levels of support, with the current scheme levels of support range from 1% to 85%.

What are the aims of the scheme?

  • Protection for those in receipt of certain disability incomes
  • Support for those who are working and on a low income and in particular those on zero-hour contracts.
  • Support those moving from out of work benefits to work
  • Provide a higher degree of certainty in respect of Council Tax payments

Why We Are Consulting

For 2020/21, the Council is proposing to simplify the scheme and change it to the following income banded scheme.

Characteristic

Level of reduction  

Households with children also receiving disability benefits - PIP, DLA, AA

85%

Households with children in receipt of a passported benefit or Universal Credit and not working

72%

All other households with children and with gross earnings below £17,680 pa

51%

No children, receiving disability benefits - PIP, DLA, AA

85%

No children in receipt of a passported benefit or Universal Credit and not working

62%

No children and with gross earnings below £12,116 pa

41%

 

Pensioners will continue to receive support of up to 100%.

The proposed scheme includes the following further changes:

  • All non-dependants (e.g., grown up children or other adults including relatives) living in the property will be expected to contribute towards the Council Tax. There will be a flat rate of £12.00 per week for those who are working and £5.00 per week for those who are not working.
  • There will be a minimum award of £5.00 per week. If your reduction is calculated at less than £5.00 per week, you will be liable to pay the full Council Tax charge.

The Council will continue to provide a hardship fund for those vulnerable residents facing financial difficulties. In partnership with other organisations, the Council will support residents to move into work, or better paid employment, by facilitating training and skills development, and provide money advice to support financial independence.

What Happens Next

A final decision will be made by full Council in January 2020.

Areas

  • All Areas

Audiences

  • Council Tenants and Leaseholders
  • Older people
  • Young people
  • All residents
  • Community and Voluntary Sector
  • People with a disability
  • People on benefits

Interests

  • Council Tax