Council Tax Reduction Scheme 2024/25

Over the next few years, working-age residents in receipt of Council Tax Reduction will transition over to Universal Credit.  

Under the current CTR scheme, changes in income and household composition may cause a recalculation of entitlement which may lead to a new Council Tax Bill being sent to the claimant every time a change is actioned.  

The aim of the change to the CTR scheme is to create an adaptable and simple structure, that minimises the impact of income fluctuations, reduces administrative burden to the Council in application, that protects the Council’s most vulnerable residents including those already receiving CTR under the current scheme and provides additional support to many of these households. 

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 Wandsworth 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 of 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. Wandsworth’s Local CTR scheme for Working Age Claimants 

Currently Wandsworth Borough Council calculates Council Tax Reduction through a Means Tested benefit scheme using government rates amended annually. A Means Tested reduction scheme is based on a claimant’s income and savings, the present scheme requires a minimum contribution of 30% of the eligible charge – unless you fall into the vulnerable category.  

The scheme also adopts a protection scheme for vulnerable households, reducing their minimum contribution to nil, these vulnerable households include: 

• Households that receive a Disability Premium within their CTR claim (for either claimant, partner or dependent child)  
• Households that receive a Carer’s Premium within their CTR claim (claimant or partner)
• Households where the claimant or partner are within the ‘Support Group’ for Employment Support Allowance  
• Households receiving a Disability Banding Reduction from Council Tax  
• Households receiving either War Disablement Pension or War Widows Pension (either claimant or partner)  
• Households containing a dependent child aged under 3 years old 
• Households entitled to the Universal Credit Limited Capability for Work and Work-related activity (LCWRA) 

The proposals aim to strike a balance between the need to provide financial stability to residents while maintaining a scheme that is financially sustainable for the Council’s wider budget.  

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

The proposed scheme designates working-age residents to one of the five eligibility levels based on specific criteria, utilizing status and a maximum income figure. 

The status bands are as follows: 

Under the new scheme vulnerable people including residents with dependents under 3 years of age are still protected and will have their CTR calculation based on 100% eligible Council Tax.  

The main change with the proposal is that a maximum income has been introduced. This has not affected the current caseload as the table below demonstrates.  

The Maximum Net income levels can be adjusted over time to take into consideration rising incomes against the rising cost of living which impacts all the identified protected groups. 

Using Wandsworth’s current caseload, this scheme benefits 3,286 working-age residents, by reducing their council tax bills. The further 5,561 working age claimants are not affected by the proposal, as shown in the table below:

This scheme is more generous and will cost more, which may result in an increased Council Tax liability for those that pay. It is important to note however, that Wandsworth already has a low Council Tax compared to other London boroughs. 

Over the next few years, working-age residents in receipt of Council Tax Reduction will transition over to Universal Credit.  

In response to this UC rollout, this new proposal poses a simplified and stabilised alternative scheme to remove administrative burdens for both working-age claimants and the Wandsworth local authority. 

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. 

For this reason, we want to consult with our residents in order to provide a favourable scheme.  

The scheme has a number of benefits:  

• It minimises the impact of income fluctuations due to 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 a transparency for residents and the Council.

Based on the current CTR caseload, there is a 9% increase in annual costs from £5,269,699 to £5,756,673.  

This scheme results in no households receiving less CTR and 3,286 receiving additional support. 

We considered three alternative schemes: 

1. To retain the existing means tested scheme. This does not remove any of the administrative burdens caused by the UC rollout   

2. A means-tested 100% Reduction Scheme, which increased the maximum CTR from 70% to 100%, removing the concept of a minimum contribution. This scheme does not remove any administrative burdens caused by the UC rollout, and therefore does not solve the income fluctuation issue

3. An Income Banded scheme. This was the most complicated, did not benefit all of those households currently eligible for CTR and was the most expensive

Example 1

Unemployed lone parent with two children between the ages of 5 and 15 and in receipt of out of work benefit Universal Credit. The eligible weekly Council Tax is £20

Council Tax Reduction status band

Working age 2 - Household with no earned income with children.

They will receive a CTR percentage reduction of 90%

Weekly Council Tax Reduction - £18

Weekly Council Tax to pay - £2

Current Scheme

The same household currently receives a 70% Council Tax Reduction.

Weekly Council Tax Reduction - £14

Weekly Council Tax to pay - £6

Under the status banded scheme the household will receive more support towards their Council Tax.

Example 2

A single person with no children. They have earned income of £120 weekly. The eligible weekly Council Tax is £20

Council Tax Reduction status band

Working age 5 - Household with earned income without children.

They will receive a CTR percentage reduction of 75%

Weekly Council Tax Reduction - £15

Weekly Council Tax to pay - £5

Current Scheme

Maximum Council Tax Reduction would be 70%. Due to scheme being means-tested, any income or capital will further reduce entitlement.

Weekly Council Tax Reduction - £12.96

Weekly Council Tax to pay - £7.04

Under the status banded scheme the household will receive more support towards their Council Tax.