Richmond Council Tax Reduction Scheme 2025/26

Currently working-age residents in receipt of Council Tax Reduction are transitioning over from Legacy Benefits (e.g. Housing Benefit) to Universal Credit.  

Under the current CTR scheme, changes in income and household composition may cause a recalculation of entitlement. This can result in a new Council Tax Liability notification being sent to the claimant every time a change is actioned.  

Due to Universal Credit entitlement being calculated on a monthly basis, this can result in the recalculation of CTR entitlement, leading to multi-year Council Tax billing.

In response to the Universal Credit rollout, this new proposal offers a simplified alternative scheme which is designed to:

• Create a simple and adaptable process which is easier to understand for residents
• Reduce the administrative burden on the Council whilst providing additional support to households who are financially vulnerable

We want to strike a balance between the need to provide financial stability to residents whilst maintaining a scheme that is financially sustainable for the Council’s wider budget.   

Council Tax is a form of local taxation that helps pay for local services, such as refuse collection, care for elderly, and the police and fire service. 

The level of Council Tax a household is required to pay is based on the defined band of the property they live in, less any discounts or exemptions for which they qualify. 

From 1 April 2013, Council Tax Benefit was replaced by localised schemes. In Richmond, this is called the Council Tax Reduction scheme.  

Council Tax Reduction is to help people who are on a low income to pay part or all their Council Tax. The Government requires us to protect the claiming process for pension age claimants so there are two CTR schemes in place: 

1. The prescribed scheme for Pensioners 
2. Richmond’s Local CTR scheme for Working Age Claimants 

Currently, Richmond Council operates a means tested scheme to help low-income residents with their Council Tax payments. The current scheme, introduced in April 2019, increased the maximum level of CTR awards for working-age households from 85% to 100% of their Council Tax Liability.

The level of discount depends on the amount of Council Tax you pay, the number of people who live with you, and your household's income, savings, and circumstances. 

The maximum CTR you can receive is capped at Council Tax Band E. If your property is Band F, G, or H, then the maximum reduction you can receive is the Band E amount and you will have to pay the difference.

The Band E Cap for working age households is not applied where the household is considered vulnerable. You are considered as vulnerable if you are of working age and you application includes any of the following: 

• Disability Living Allowance (DLA) and its replacement Personal Independence Payments (PIP) 
• Severe Disablement Allowance 
• Support Component of Employment and Support Allowance 
• Incapacity benefit (long term rate) 
• Disability element of Working Tax Credits  
• Dependent Child who receives DLA or is registered blind 
• Carers Allowance 
• If you qualify for Council Tax disabled band relief 
• War Disablement Pension 
• War Widows Pension 

The level of CTR awarded varies depending on the household’s make up and the level of income it receives.  

The proposals aim to strike a balance between providing an appropriate level of support to low-income households whilst maintaining a scheme that is financially sustainable for the Council.  

The level of support provided to pensioners through the scheme is determined by the government, therefore if you are a pensioner, the level of support you receive will be unaffected by the proposed changes. 

The proposed scheme assigns households to one of 5 working-age bands (WA 1-5), based primarily on whether the household has children and if they earn an income from work.

Bands WA1-3 are for households who do not earn an income from work. Bands WA4 & WA5 are for households who do earn an income from work. Bands WA4 & WA5 are split into 4 Income Bands (A-D) depending on the level of Net Earned Income a household receives.

The level of support you receive is based on the Band your circumstances and income place you in, and is a percentage of your Council Tax applicable to the appropriate band.

The status bands are as follows: 

If you are a pensioner the level of support you receive will be unaffected by the proposed changes. 

Most households will not be affected by the proposed changes, and 954 (19%) households will receive a higher level of support than they currently do. Only 7% (355) of households in Bands WA4 and WA5 i.e. households in receipt of earned income, will be adversely affected by the change.  

The main change in the proposal is the introduction of a maximum income limit. The maximum net income levels can be adjusted over time to align with the rising cost of living.

To mitigate the effect on the households adversely affected by this change, a Transitional Protection scheme will be introduced over a three year period, with the level of protection reducing each year.

This scheme is more generous and it means that some households will receive more support than they receive under the current scheme. The proposed scheme will however reduce the level of Council Tax support for 7% of those currently eligible, and it is proposed that these households will receive Transitional Protection for a period of up to 3 years.

The scheme has a number of benefits: 

• It minimises the impact of income fluctuations by using a set income amount  
• It provides additional support to some households already on CTR 
• The reduction percentage for each council tax band is fixed and known in advance, allowing households to plan their budget. This is a more efficient and simplified scheme, creating transparency for residents and the Council. 

Based on current household figures, there will be a 3% increase in annual costs from £8,130,062 to £8,372,461. 

This scheme will result in 355 households moving to the Transitional Protection Scheme, and 954 households receiving additional support. 

We considered three alternative schemes to the Council Tax Reduction Scheme. 

1. To retain the existing 100% means tested scheme - retaining the current means tested scheme would have meant keeping a complex system that involves detailed calculations. As working-age households transition to Universal Credit, these calculations would become more detailed and complex. The means tested calculations are often hard to understand and it is becomes difficult for a household to know what support they will receive until the calculation is complete. The proposed CTR scheme will allow households to see the level of support they will receive immediately.

2. Status Banded scheme - a simple status banded scheme was proposed, where CTR was based solely on household status and a single income cap. However, this model resulted in too many households being negatively affected

3. An Income Banded scheme - this option was more complex than the scheme being proposed. It would have resulted in significanlty more than five status bands, making it harder to understand and removing the simplicity and transparency that were key reasons for changing the current scheme.

Example 1

A couple with 3 children living in a Band E property with a weekly Council Tax charge of £53.06. ​They have no earned income and claim universal credit. ​

CTR Weekly Entitlement

Current Scheme: £53.06 = 100% support

New Scheme: £53.06 Band WA2 (Households with children and no earned income) =100% Support ​

Example 2

A lone Parent with 2 Children living in a Band C property with weekly Council Tax of £28.94 ​Has an earned income of £107.77. ​

CTR Weekly Entitlement

Current Scheme: £14.99 ​

New Scheme: £24.59 Band WA5A (lone parents with up to 2 dependents and earned income) = 85% Support 

Under the new scheme, the household receives £9.60 more each week towards their Council Tax bill.​​

Example 3

A Couple with 2 children in a Band C property with weekly Council Tax £38.59 with an earned income of £257.31.​

CTR Weekly Entitlement

Current Scheme: £12.60 ​

New Scheme: £23.15 Band WA5C (Household with earned income) = 60% Support 

Under the new scheme, the household receives £10.55 more each week towards their Council Tax bill.

Example 4

A couple with no children living in a Band E property with a weekly Council Tax charge of £53.06. They have an earned income of £363.79 and claim universal credit.​

CTR Weekly Entitlement

Current Scheme: £23.61= 42% Support

New Scheme: £18.57 Band WA4D (Households with no children and earned income) = 35% Support

Adverse Effect: £5.04 (23.61 – 18.57)

Transitional Protection: In year 1 would receive up to £262.08 (£5.04 for 52 weeks) towards their Council Tax bill.