It’s time to rethink Council Tax Support
People are struggling with Council Tax Debt. But support to help pay your Council Tax bills is a postcode lottery
Millions of people are falling behind on their Council Tax. Households in England now owe a total of £5.5 billion in unpaid Council Tax, a 10% increase since last year.
Council Tax arrears can be a slippery slope. When you miss 1 month’s payment, you become liable for the whole annual bill. Falling behind can lead to court action, benefit deductions or bailiff enforcement.
At Citizens Advice, we’ve helped more than 70,000 people with issues related to Council Tax debt in the past year. Nearly half (47%) of the people we’ve helped with a budget plan since April were in Council Tax debt.
A crucial tool for preventing Council Tax debt is Council Tax Support (CTS). CTS is where Local Authorities give people on low incomes a reduction on their Council Tax bill. But too often CTS isn’t enough to keep people out of debt.
Council Tax Support replaced Council Tax Benefit in 2013
Until 2013, Council Tax Benefit (CTB) provided people on low incomes with a discount on their Council Tax bill. Families receiving a means-tested out-of-work benefit received maximum CTB, which covered 100% of their Council Tax bill.
People who didn’t receive one of these benefits were means-tested. If your income fell below a certain amount based on your circumstances, you’d receive maximum CTB. For every £1 of income you had over this amount, you’d lose 20p of your CTB. So, if you earned £50 a week over this amount you’d lose £10 of your weekly CTB entitlement. CTB was a national benefit; the same rules applied to everyone across the country.
In 2013 the government localised support for Council Tax. This meant each Local Authority designed its own CTS scheme to support residents with Council Tax costs. Instead of one scheme, there are now hundreds, all with their own rules.
Support for paying Council Tax isn’t enough
At the same time as localising CTS, the government cut its funding by 10%. As a result, most councils have made their schemes less generous than the old Council Tax Benefit. This means some households lose out on £100s worth of support each year.
Most (70%) CTS schemes now have a ‘minimum payment’. This is the minimum amount of Council Tax that all residents must pay, regardless of income. Many households who’d have paid no Council Tax before 2013 now have to pay at least some of their bill.
Around 30% of Local Authorities now have an ‘income banded’ scheme. Instead of support gradually reducing as your income increases, your entitlement depends on what ‘band’ of income you fall into. So, your entitlement could change significantly with only a small change in income.
Councils can also decide which parts of your income they include as part of their calculations. In some places, this can include financial support such as childcare or disability allowances.
Tracy’s Story
Changes to local schemes have huge impacts on the people we help. Tracy* lives with her partner and children, one being severely disabled. She previously received the maximum CTS from her Local Authority, which gave her an 80% discount on her bill.
Tracy’s Local Authority introduced a new CTS scheme in April. New rules mean that the money she receives from disability and caring elements of Universal Credit is now considered income. This means she no longer qualifies for any CTS as her income is too high. Tracy now has to pay her full Council Tax bill, even though her financial situation hasn’t changed. Her monthly costs have increased by more than £100 and she is falling behind on her payments.
The Local Authority says that the new scheme is more generous because it offers a 100% discount for those in the lowest income band. But not everyone benefits from this change and some people lose out, like Tracy.
Council Tax Support is a postcode lottery
CTS is a postcode lottery system. Hundreds of schemes across the country calculate entitlement in different ways. Tracy would still receive an 80% Council Tax discount in some other places. Instead, she is under increasing pressure to meet her rising costs.
Households are missing out on the support they desperately need to pay their bills and are building up debt. We need a system that works for everyone, no matter where they live. It’s time the government rethinks Council Tax Support.
* Name has been changed
