Consultation: Proposed changes to Council Tax Support

Consultation closed: Tuesday, 1 November 2022
Consultation opened: Wednesday, 21 September 2022

The original scheme was designed to meet four principles, and these have informed the proposed changes to the scheme.

The principles are that the scheme:

• is affordable – so that taxpayers and services don’t suffer
• requires people to make a fair contribution – those who can pay should pay
• encourages people to earn a living and incentivises work
• protects the most vulnerable

The objective is to simplify the scheme for both residents and us, yet minimise any negative impact on residents so that nobody is worse off.

We considered not taking into account childcare costs. Childcare costs are the only expense or outgoings that are considered in the support calculation. It was felt that this would have a negative impact on working households paying for childcare and would not motivate people to earn a living. Therefore, the new scheme continues to take childcare costs into consideration.

We also thought about options around how many children to consider in a household. At the moment, Council Tax Support takes into account precisely how many children there are in your household (there is no upper limit) and the support is calculated accordingly.

In effect the more children in the household, the more support could be provided. Generally, Universal Credit and Housing Benefit only take into account up to two children in a household and we considered an approach in line with this. However, we felt this would negatively impact too many households, so we are proposing our new scheme takes into account up to 3 children in a household.

This affects 391 current working-age claimants in Central Bedfordshire who have more than 3 children.

The new scheme

We are proposing to move to a banded income system. This means the scheme will still be means tested but instead of calculating support based on exact income and earnings, we will use a banded system. This means if you earn a bit more or less, the Council Tax Support will not change unless you move between the bands. The savings and capital limit of £16,000 remains unchanged.

The income bands are different for single people and couples and how many children are in the household.

The proposed banding system is shown in tables 1 and 2 below and will be used to consider household composition along with weekly household income and earnings to work out a percentage reduction in Council Tax.

If your income or earnings change and this means you move bands, this could mean Council Tax Support could change more significantly than under the current scheme. We believe this disadvantage is counter-balanced by the increased flexibility that a banded system offers, by allowing and encouraging households to increase their income or earnings within their current band without reducing their Council Tax Support.

As well as introducing income bands, we are also changing how many children in a household we will take into account. At the moment, Council Tax Support takes into account precisely how many children there are in the household (there is no upper limit) and the support is calculated accordingly. In effect, the more children in the household, the more support is provided. We are proposing our new scheme takes into account up to 3 children in a household.

The scheme will continue to provide extra support to the most vulnerable residents. Once the household size and income are considered, other factors like having a disability, being a carer or a single parent etc. are considered and can increase the amount of support they can receive.

Alongside the introduction of the banded system, the new scheme has also been simplified in the following ways:

• removing the need for working-age residents to pay a minimum of 25%; this means some residents on low incomes can get more support
• ignoring or disregarding Carers Benefit – effectively providing more support for those with caring responsibilities (see table 3 below)
• ignoring or disregarding disability benefits, effectively providing more support for people with a disability (see table 4 below)
• support will no longer reduce if a non-dependant adult lives with the resident; this means if the non-dependent adult (i.e. an adult son/daughter) is working, the claimant can get more support (see table 6 below)
• under the current scheme there are several earnings disregards (an amount of earnings which is ignored). These vary from £15 to £35 per week and in some cases an additional £17.10 can be disregarded dependant on the number of hours worked. Under the new proposed scheme there would only be two earnings disregards of £32 for single people and £52 for couples, single parents, couples with children, single people who are carers and single people who are disabled. These 2 new amounts of earning disregards are the equivalent (to the nearest £1) of the maximum disregards available in the current scheme and are above the rates considered in Housing Benefit. These changes are shown in table 5 below.

Also see table 5: Earnings disregards.

People with a disability

*The criteria for these disregards will be the same as under the current scheme for the equivalent premium (additional allowances). Although the way this is calculated will change (from premiums to disregards) the amount of support does not change.

Also see table 5: Earnings disregards.

Amount ignored

Non-dependant adult deductions

A non-dependant is any person over 18 who normally lives with the resident, such as an adult child, relative or friend.

The current deductions vary in amount, up to £15 per week for each non-dependant, depending on each non-dependant’s income.