Council Tax Reduction Scheme

The Council Tax Reduction (CTR) scheme helps people on low incomes to pay their council tax. The level of reduction is based on the income of the household.

We want to make changes to the scheme to:

• make it easier to apply;
• make the system work better for those receiving Universal Credit;
• ensure that those households on the lowest incomes are protected and continue to receive the maximum reduction;
• help residents to better understand if they are eligible and what they may be entitled to;
• reduce how often we make changes to the level of reduction awarded;
• maximise the uptake of this important support;
• make the scheme easier to administer.

Currently the maximum reduction for pension age households is 100% and for eligible working age households it is 88% of their bill. The current cost of the scheme in Salford for 2024/25 was £28.2 million, made up of £9.8 million in pensioner support and £18.4 million in working age support. The proposed changes laid out in the consultation are cost neutral.

The changes will only apply to working age applicants. Pension age applicants will see no change because they are part of a national scheme which is set by the government. 

We are seeking your views on the proposed changes which would come into effect from 1 April 2025. It should take around 10 minutes to read and feedback on this consultation.

The existing scheme has remained broadly unchanged since the government required us to introduce it in 2013. We believe there are ways to make it simpler and to better target support to the most vulnerable. The need for change has become pressing due to the introduction of Universal Credit, which is gradually replacing older benefits. Universal Credit recipients need to provide us with a lot of information to claim council tax reduction and are subject to frequent changes in their entitlement (and therefore the amount of council tax they need to pay). This can be both confusing and complicated.

We propose to change the scheme for working age applicants to:

• Place applicants into income bands rather than use their precise income. This will reduce the number of times a council tax bill will change due to small changes in income.
• Use income notifications from the Department of Work and Pensions to determine a household’s eligibility for reduction. This will simplify the application process for applicants.
• Consider only income identified by the Universal Credit assessment as the income available to meet the household’s general living expenses, including council tax.
• Exclude any income identified by the Universal Credit assessment as needed to meet the household’s direct housing, caring, disability or childcare costs and other allowances provided by the government. This would mean disregarding non-means tested benefits like PIP, DLA, Child benefits, war pensions and other allowances such as cold weather payments
• Apply the same exemptions for non-dependent deductions as those applied by the Department for Work and Pension to Universal Credit housing costs. This includes a flat rate non-dependent deduction of £7 as the expected contribution to the council tax bill for each non-dependent in the household unless the claimant, partner or the non-dependent meets the non-dependent deduction exemption criteria.

The table below is a guide to the income that the scheme will use to determine eligibility and the income that will not be used.*

*UC capital tariff income, the monthly income that is assumed to come from capital of between £6,000 and £16,000, has been taken into account as income by the Department for Work and Pensions when calculating the UC payment. Capital tariff income will therefore no longer also be included as income for the banded scheme. The capital limit will remain at £16,000. 

The scheme will have income bands for the following different types of households:

• Single
• Couple
• Family plus one child
• Family with two or more children

Both family categories include lone parent households, enabling them to earn as much as a couple household before losing support.

Households where the claimant and/or partner are under the age of 25 will be able to earn as much as a household over the age of 25 before losing support.

The use of income bands recognises that households with two or more children that are subject to the UC two child limit, will have less income than those households that are not. 

The table below shows the monthly income bands for the different categories of household and what percentage reduction would be applied to the council tax bill. For example:

A household where there is one parent and one child, with a monthly income of £1,072 would be eligible for a reduction of 50%.

Or:

A household where there are two parents and three children, with a monthly income of £1, 500 would be eligible for a reduction of 88%. 

Income bands will be increased for 2025/2026 in line with any percentage increase in Universal Credit from 1 April 2025.