Council tax reduction and housing benefit similarities and differences Introduction The Council tax reductions (CTR) scheme reduces the amount of council tax you have to pay if you are on a low income. Your council tax bill is reduced by the amount of CTR you are entitled to. There are three types of CTR. Your local authourity should apply the type of CTR that will give you the greatest reduction. The rules are set by the Scottish Government, and the scheme is run by your local authority, like housing benefit (HB). However, there are important differences, particularly in terms of how you challenge decisions about CTR that you disagree with. CTR is separate from a Council tax discount, which reduce your liability for council tax due to the composition of your household. This factsheet is aimed at advisers who are familiar with HB and sets out some of the most important similarities and differences, and where to find further information. Similarities The majority of the entitlement conditions The CTR scheme is very similar to HB. The basic rules are as follows. You must be liable for council tax to qualify. There are separate rules if you are over pension credit age (the age at which a woman qualifies for a state pension, rising to 65 by November 2018). There are residence and presence conditions that must be satisfied. There is a capital limit of 16,000 unless you get guarantee pension credit. If you are under pension credit age, tariff income from capital is taken into account if you have savings over 6,000. If you are over pension credit age, savings over 10,000 affect your award. Some kinds of capital are ignored. Deductions from your maximum CTR are normally made for non-dependants who live with you. If you get one of the following passporting benefits, you automatically get your maximum CTR: income support; income based jobseeker s allowance (JSA); income-related employment and support allowance (ESA); or guarantee pension credit. If you do not get one of the above benefits, the applicable amount before your CTR starts to be reduced depends on whether you are in a couple and are responsible for any children.. Most allowances and amounts are the same as the HB applicable amounts but see the The calculation of applicable amount section below for when they vary. If you get universal credit (UC) your applicable amount is calculated differently see the The calculation of entitlement under universal credit section below.
As for HB, the family premium has been removed for new CTR claims made on or after 1 May 2016. There is transitional protection for people getting the premium on 30 April 2016 (until their claim ends). If your income is below your applicable amount you get maximum CTR (but will still be billed for water and waste water charges). If you have income above your applicable amount, your entitlement to CTR is reduced by 20% of your excess weekly income. Some kinds of income are ignored. The application process If you are claiming housing benefit (HB) and CTR, you usually use the same form to claim both, which you can get from your local authority. You can claim CTR even if you are not entitled to HB. The DWP can take a HB claim when you are applying for some benefits, but cannot take CTR claims. You should apply to your local authority as soon as you may qualify for CTR. This is particularly important if you are claiming universal credit (UC). The date your entitlement starts The rules for backdating CTR are the same as those for housing benefit. If you apply for CTR within one month of the date on which you applied for one of the DWP passporting benefits listed above (or universal credit - UC), your application for CTR is backdated to the first day of your entitlement to that benefit. If you are entitled to one of the DWP passporting benefits (or UC) on the day you become liable for council tax, your entitlement to CTR is backdated to the first day you were liable, as long as you apply for it within one month. If your partner got CTR and s/he has died or you have separated, your entitlement is backdated the date of the change if you apply for CTR within one month. The other backdating rules depend on your age. If you are over pension credit age, your application is automatically backdated three months if you ask for this to happen, and met the entitlement conditions throughout that time. If you are under pension credit age your application can be backdated for up to one month, but you must ask for this to happen, and you must also show continuous good cause for your failure to apply sooner. The decision notice Local authorities normally issue joint HB and CTR decisions if you have claimed both. There is no legal requirement for a separate CTR decision to be sent in addition to your council tax bill, although you must be notified when your council tax instalments change. The identity of the decision makers In most local authorities the same teams are dealing with claims for housing benefit and council tax reduction. Check your local authority s website or letters sent to you about your claim for how to contact the right team.
Differences Despite the many similarities, there are several important differences between housing benefit (HB) and council tax reduction (CTR), some of which are highlighted below. The legislation underpinning the scheme The CTR scheme is established using powers in s80 of the Local Government Finance Act 1992, which enables the Scottish Ministers to set out reductions to council tax liability in regulations. This means that there are important differences that you need to be aware of when challenging decisions, and in terms of what information the local authority is required to provide to you. The calculation of applicable amount Unlike HB you get a personal allowance for each dependent child or young person i.e. the two child limit does not apply to CTR (however if you come under UC see below). The personal allowance for each dependent child or young person in Scotland is 83.63. This is 16.73 higher than the same allowance to be used when calculating HB. The calculation of entitlement under universal credit The calculation of your entitlement to CTR is different if you get universal credit (UC). Most UC claimants do not get housing benefit (HB) instead there is a housing costs element in UC. If you get UC, it is important to apply for CTR to your local authority as soon as you can. For CTR, the local authority must use the DWP s figures for your universal credit maximum amount as your applicable amount for CTR, and the DWP s assessment of your income and capital (both converted to weekly figures), with the following caveats. For each child or young person in your family your applicable amount is increased by 16.73. Your actual award of universal credit is also taken into account as income. If you have deductions made from your award to pay certain costs (often called third party deductions ) your universal credit amount before these deductions are made counts as income. If the local authority believes that you and a non-dependant living with you are taking advantage of the scheme and the non-dependent has more income and/or capital than you, their income and capital are treated as yours. If your universal credit is sanctioned, your CTR should increase (unless you already get the full amount of CTR). This is because your actual payment of UC counts as income, not the amount before the sanction is applied. Non-dependants and non-dependant deductions The rules about non-dependants are slightly different to housing benefit. In practice the rules about who is a non-dependant are similar for example, grown up children living at home are, but those jointly liable for council tax, live-in carers and lodgers are not. However, for CTR a landlord you live with can count as a non-dependent. As for housing benefit, no deduction is made for any non-dependant if you or your partner are registered blind or get disability living allowance care component; personal independence payment daily living component; attendance allowance or armed forces independence payment.
The list of non-dependants for whom no deduction is made from your CTR is different. No deduction is made if the non-dependant: normally lives elsewhere; is a member of the armed forces away on operations who normally lives in the dwelling; is a full time student (even during the summer vacation); has been in hospital for over 52 weeks; is over 18 and child benefit is still payable for her/him; is on any income support, income-based jobseeker s allowance, income-related ESA or pension credit; is on universal credit and has no earned income; or qualifies for a status discount from the council tax bill. This includes people with a severe mental impairment, some carers, and several other categories. If a deduction is made, the amount of it depends on whether the non-dependant is in remunerative work (16 hours or more a week); and if so the amount of earnings. Second adult rebate The rules provide for an alternative maximum CTR, more commonly known as a second adult rebate. This allows for CTR to reduce the council tax based on there being other adults living with you with a low income (other than your partner, someone jointly liable for council tax with you, and people completely ignored for council tax, such as full-time students). In most cases the council tax is reduced by up to 25% however if the only person living in the property who is not a full-time student is on a means tested benefit, the maximum second adult rebate is 100 per cent of the council tax bill. Exemption from Band E H increases From April 2017 the council tax bands E H were increased in relation to the lower council tax bands. A third form of CTR has been created to provide an exemption from this increase for households with income below the median income. To qualify you must have capital below 16,000 or get a passporting benefit, and have income below or near the Scottish median income for your household type ( 16,750 for single people without children, 25,000 for any other household). You must also make a claim for CTR and meet the basic eligibility criteria. If your income is less than, or equal to, the relevant median income you get a CTR equivalent to the relative increase in your council tax due to the Bands E H increases detailed above. Your CTR is reduced by 20% of your income above the relevant median income. Example A lone parent, with an income of 485 per week, lives in a band E property. Their council tax is 31 per week. Their income is above the Scottish median income for their household type by 6. The increase due to the changes to the bands E- H is 2.16 per week. 20% of their income above the relevant Scottish median income is 1.20. Their CTR is 0.96 per week.
Overpayments There is no equivalent to the housing benefit rules about when an overpayment can be recovered from you. The local authority simply recalculates your annual council tax bill, based on its decision about the amount of CTR that you are actually entitled to. European nationals If you are an EEA national whose only right to reside in the UK is as a jobseeker, you can qualify for CTR, even though you cannot get housing benefit. You must be accepted as habitually resident in fact to qualify. Challenging decisions As CTR is not a social security benefit, the way to challenge decisions is completely different. If you disagree with a decision about your entitlement to a council tax reduction, you can ask the local authority to review its decision. Your decision notice must tell you how to request a review. You must do so in writing within two months of the date on which the decision was made. This time limit cannot be extended (you should seek expert advice if there was no way that you could meet the time limit as you may be able to apply for a judicial review). Your request must state why you disagree with the decision. The local authority must consider your request within two months. It then issues you with a further decision. If you wish to challenge this, you must request a further review in writing, within 42 days of the date of the decision on your first review request was sent to you. You request a further review by applying to the Council Tax Reduction Review Panel (CTRRP). If the local authority has not responded to your first review request within two months, you can request a further review. You should write to both the local authority (required by the regulations) and the CTRRP (as this is what the guidance says) requesting a further review. Once you request a further review, the local authority can no longer make a decision on your initial review request. Guidance produced by the CTRRP states that your review request must: be in English; include with it a copy of your local authority CTR decision letter (if the local authority has reviewed your application it is better to send both the original decision and their reply to your review request); inform the CTRRP if you have an ongoing housing benefit appeal; give reasons for the request of a review; and be signed by you, unless a court has appointed someone else to act for you. An application form that can be downloaded from the CTRRP website (http://counciltaxreductionreview.scotland.gov.uk/) is a good way to include all of the information required. This includes details of any representative helping you, and whether you want an oral hearing of your review or not. What happens at a further review The further review is similar to a housing benefit appeal tribunal, in that it will normally be decided by a single, legally trained review panel member. You can have an oral hearing and if
you choose to, and the local authority may also send a representative, called a presenting officer. Hearings are informal, but may involve the panel member asking you lots of questions about why you think you should be entitled. Having a representative is a good way to get advice about your chances of success, what to expect and what you are likely to be asked. You can only withdraw your further review request with the consent of the senior reviewer. You can claim travel expenses by public transport or car to attend a review panel. If you need a taxi, you must contact the CTRRP in advance to get this authorised. After the review panel You normally get a decision on the day your review request is decided. The decision is binding on the local authority, which must implement it as soon as possible, including calculating the amount of CTR that you are entitled to. If you are unhappy with the decision, you can request a full statement of reasons by writing to the review panel. You must do this within 14 days of the decision. You can request a recording of the hearing, but providing this is at the discretion of the panel. You can request that the review panel decision is set aside. You must make your request to the review panel within 14 days of its decision, and give reasons. It is particularly important to consider this if you are also thinking about challenging a housing benefit tribunal decision made for similar reasons by appealing to the Upper Tribunal. Further information Contact your local authority if you want to apply for CTR. If you do not know their contact details look in the phone book or go to www.cosla.gov.uk The Scottish Government has published information about the CTR scheme on its website: www.gov.scot/topics/government/local-government/17999/counciltax/ctr The CTRRP has its own website: http://counciltaxreductionreview.scotland.gov.uk/. You can also contact the CTRRP by phone on 0141 302 5840. CPAG also publishes an annotated commentary to the CTR regulations: CPAG s Housing Benefit and Council Tax Reduction Legislation. More details of all our publications, and further information and factsheets about other areas of the law are available from our website: www.cpag.org.uk/ Child Poverty Action Group, 2017 Child Poverty Action Group is a charity registered in England and Wales (registration number 294841) and in Scotland (registration number SC039339). Company limited by guarantee registered in England (registration number 1993854). Registered office: 30 Micawber Street, London N1 7TB