Council tax support scheme

This consultation is Open

Consultation Open 05 November 2024 to 16 December 2024

Council Tax Support Scheme consultation

Nottingham City Council is consulting on future options for its Council Tax Support Scheme affecting working age people.

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Council Tax Support is a discount which helps households on low incomes with their Council Tax bill.

Around 19% of households in Nottingham are in receipt of Council Tax Support and the scheme costs over £30 million a year to operate.

Applying the discount affects the amount of Council Tax the Council receives and has an impact on the amount of Council Tax that all households in the city pay.

The scheme has not been reviewed since it started in 2013, despite changes to Welfare Benefits and Council funding over this period. Like all Local Authorities the Council has several financial challenges. The proposals enable the Council to provide a scheme that is financially sustainable in future years.

The aim is to have a scheme that continues to support those on the lowest incomes and is future proofed in terms of its cost.

The proposals do not affect the Council Tax Support Scheme for pensioner households, the rules for which are controlled by Central Government.

The proposed changes to the Scheme will affect all working age (under state pension age) households.

We would like to hear your view on the proposals which if agreed will be implemented in April 2025.

Proposal 1

Reducing the maximum level of Council Tax Support for working age households not in protected groups from the current 80% of their net Council Tax liability to either 30%, 40%, 50%, 60% or 70% of their net Council Tax liability.

This proposal would reduce the costs of the scheme as follows:

Maximum Level of Support	Gross Cost Reduction
30%	£13,141,467
40%	£10,626,518
50%	£8,055,881
60%	£5,419,411
70%	£2,730,619
80% (No Change)	£0

The chart below details the proposed weekly deduction in Council Tax Support and the number of working age household affected by each reduction

Proposal 2

Restricting the support to a maximum Band B Council Tax liability. If you are in a Band C to Band H property, the maximum support will be based on Band B Council Tax liability. That is, the amount that Council Tax Support will be based on as if you lived in a Band B property even if you live in a property that is Band C to Band H. This is to target Council Tax Support to households living in smaller, less expensive property so that those living in larger properties do not receive greater levels of support than those occupying smaller properties.

This proposal is likely to impact 671 households and would reduce the cost of the scheme by £179,809.

The following shows the number of working age households in each band that are currently in receipt of Council Tax Support. 95% of Council Tax Support recipients (18,577) live in a Band A-B property compared to 671 living in a Band C-H property):

Band A	16791
Band B	1786
Band C	490
Band D	138
Band E	28
Band F	10
Band G	5
Band H	0

Proposal 3

Introducing a minimum threshold of £2 in respect of in year changes to entitlement

Following the migration to Universal Credit, real time reporting of income means that for some households Council Tax Support is calculated frequently, resulting in re-billing, and resetting of their instalment plan. It is proposed to introduce a minimum threshold of £2 where any reported changes that result in a change of entitlement of less than £2 per week do not change the level of award or issue a new bill.

Proposal 4

Continuing to protect families by disregarding Child Benefit and Child Maintenance

In order to protect families, we propose that Child Benefit and Child Maintenance are not counted when assessing a person’s income.

Proposal 5

If the level of Council Tax Support reduces for working age households this proposal will protect the families with the least opportunity of increasing their hours of work the proposed scheme will protect lone parents with children under the age of 5 by having a maximum entitlement at 80% discount.

This proposal is likely to impact 1654 households and the cost of protecting these households will be as follows depending on the level of council tax support for working age households

Maximum Level of Support	Cost to protect
30%	£1,059,411
40%	£856,398
50%	£648,106
60%	£436,391
70%	£220,244
80% (No Change)	£0

Proposal 6

Will support the most vulnerable by continuing to protect households with disabilities by disregarding the following disability benefits

Personal Independence Payments;

Armed Forces Independence Payments;

Disability Living Allowance;

Attendance Allowance;

Proposal 7

The proposed scheme protects certain war pensioners by continuing to disregard the War Pension or War Disablement Pension income in full.  This is a continuation of the existing provisions.

Proposal 8

If the level of Council Tax Support reduces for working age households, to protect households including full time carers, we propose that Carers Allowance is not counted when assessing a person’s income.

This proposal is likely to impact 3365 households and the cost of protecting these households will be as follows depending on the level of council tax support for working age households

Maximum Level of Support	Cost to protect
30%	£99,740
40%	£128,754
50%	£156,589
60%	£177,767
70%	£195,405
80% (No Change)	£0

Proposal 9

Currently households with less than £16,000 capital (e.g. savings, stocks, shares, property) are eligible for Council Tax Support.

The Council is proposing to reduce the limit to £6,000. Where an applicant has more than £6,000 in capital they will not be entitled to support.

This proposal is likely to impact 199 households and will reduce the cost of the scheme by £200,948.

The chart below details the proposed weekly deduction in Council Tax Support and the number of working age household affected by this proposal.

Proposal 10

Currently the minimum weekly award of Council Tax Support is £0.50. It is proposed to raise this level to £5 per week. Where an assessment results in a weekly award of less than £5 per week the applicant will not be entitled to support.

This proposal is likely to impact 568 households and will reduce the cost of the scheme by £84,571

Proposal 11

In order to align Council Tax Support with Universal Credit, the Council proposes to use a minimum level of income (minimum income floor) for those applicants who are self-employed when assessing their entitlement to Council Tax Support.

This assumed level of income would be in line with the National Living Wage for 35 hours worked per week (16 hours for lone parents).

The income would not apply for a designated start-up period of one year from the start of the business and the Council would have the discretion to vary or waive the use of this facility in exceptional circumstances or where the Council considers that the applicant is unable to work that number of hours.

Where the declared income is at or above the Minimum Income Floor, the declared income will be used in the calculation of Council Tax Support.

This proposal is expected to impact 62 households and reduce the cost of the scheme by £39,930.

The scenarios which can be downloaded below detail the impact of the proposed changes for households:

download pdf to view scenarios here

Q. What is Council Tax?

The Council Tax that is collected, contributes to funding local services provided by the Council, including Adult Social Care, Children’s Services, Refuse Collection, and Leisure Facilities.

We also collect money as part of the Council Tax to provide Police and Fire services. This amount is included in your Council Tax bill.

Council Tax is based on the value of the property you are liable to pay Council Tax on. The level of Council Tax your household is required to pay is based on the band of the property. The level of Council Tax can be reduced by discounts, disregards, exemptions, and Council Tax Support which your household may qualify for.

Q. What is Council Tax Support?

Council Tax Support (also known as Council Tax Reduction) is a benefit to help people on a low income get a reduction in the amount of Council Tax they are being asked to pay.

Each year local authorities must agree their Council Tax Support schemes for the following financial year. The scheme is funded by the Council and in this financial year it costs the Council over £30 million to fund the scheme.

Q. How is the current 2024/25 Council Tax Support scheme calculated?

Council Tax Support reduces Council Tax bills by up to 80% for some working age households, with the household paying a minimum of 20%. (If of pensionable age Council Tax bills are reduced by up to 100%, with the household paying no minimum payment).

The amount of Council Tax Support awarded depends on a number of factors:

The type of householder (pensioner or working age)

Those who are of State Pension Age (Pensioners) will have their award based on 100% of the Council Tax.

Those of working age will have their award based on 80% of the Council Tax

Those in receipt of Income Support, Income based Job Seekers Allowance, Income-related Employment Support Allowance, Guaranteed Pension Credit and Universal Credit (not working) will get the maximum Council Tax Support. There may be a deduction for other adults living in the property – this is known as a non-dependent deduction.

Those not in receipt of Guaranteed Pension Credit, Income Support, income-based Job Seekers Allowance, or Income-related Employment Support Allowance will have a calculation based on income and needs. If there is excess income above needs (applicable amount figures provided by the Government) then Council Tax Support payments will reduce from the 100% or 80% starting point by a taper of 20% of the excess (above the applicable amount figures provided by the government)

The Council Tax Band (Band A to H)

How many other adults live with the householder where a deduction from the calculated award is made based on the circumstances of that adult (Non-dependent deduction)

The current scheme reduces the total amount of Council Tax to be collected by £32m with many Nottingham City residents benefiting from this support to help them pay their Council Tax. The Council is proposing to change our scheme in 25/26 to reduce the overall support and the amount the council must fund.

Q. Who receives Council Tax Support?

Households on low incomes qualify for Council Tax Support. It is a means tested scheme that considers the circumstances of a household, including but not limited to:

• Employment status

• Income

• Benefits received

• Savings, pensions, and investments

• Property

• Who lives in the property (for example, a partner, dependent children (dependants are those who qualify for child benefit)) and non-dependant adults (a non-dependant is a person living as a member of the applicant’s household who is not their partner or a child/young person for whom they are responsible)

Q. How will the changes affect me?

The proposed changes to the scheme will only affect working-age residents. Pensioners are exempt and will continue to be assessed under the existing system, which can cover up to 100% of their Council Tax bill. Any changes would take effect from 1 April 2025 and have been developed to deliver a fair, affordable scheme. If you are of working age and currently receive help through the Council Tax Support Scheme you are going to be directly affected. However, even if you do not claim Council Tax Support, as a Council Taxpayer you have an interest in ensuring the Council is spending the money it receives through both government funding and through Council Tax receipts appropriately.

It is important that the Council gets the views of all Nottingham City residents regardless of whether they receive Council Tax Support or not. The Council is legally required to consult with its residents when it makes changes to its Council Tax Support Scheme.

Q. What is the Council’s proposal for the Council Tax Support Scheme in 2025/26?

The Council is considering reducing the overall Council Tax Support costs to help maximise the funding to support essential services. The Council wants to make sure that the Council Tax Support provided is fair to all working age groups, targeted to those most in need and that everyone contributes towards Council Tax. We are making eleven proposals.

Q. Why is the Council proposing to change the scheme now?

The Council has not reviewed the Council Tax Support Scheme since 2013 with the cost of the scheme now over £30 million.

Several Local Authorities are reviewing their Council Tax Support Schemes and Nottingham City Council has decided to review the Council Tax Support Scheme for 2025/26 to help maximise the funding available to support essential services.

This is the earliest opportunity the Council has had to present proposals to change the Scheme.

Q. Will the proposals impact pensioners?

No, the proposal only affects households where the claimant and/or their partners are working age.

Q. What alternatives were considered by the Council?

The Council considered not changing the Council Tax Support Scheme, but the cost of the Scheme would have been unaffordable in the current financial climate with a need for Statutory Services to continue to be funded.

Q. How can residents respond to the proposals?

• Residents can share their views by completing our online survey

• The online survey and accompanying information, can be accessed at https://www.nottinghamcity.gov.uk/engage-nottingham-hub

• At the end of the survey, you press the ‘Submit’ button and the completed survey will be sent to us

Q. How can local groups and organisations tell the Council their views on the proposal?

• Representatives can share their views by completing our online questionnaire

• The online survey and accompanying information, can be accessed at https://www.nottinghamcity.gov.uk/engage-nottingham-hub

• At the end of the survey, you press the ‘Submit’ button and the completed survey will be sent to us

• A link to the questionnaire and accompanying information has been sent to key Third Sector organisations in Nottingham who, for example, represent groups such as those with disabilities and the elderly, or provide advice relating to financial matters

The following short video shows how you can translate the survey. Answers submitted in an alternative language to English will be translated our end using Google Translate.

We want our consultations to be as accessible as possible. If you require a survey in large text or braille, a sign language interpreter at one of our in-person engagement events, or anything else in order to participate in this consultation please let us know at engage@nottinghamcity.gov.uk

If you require a paper copy you can download and print it here.

If you do not have access to a printer please email us and we can sort out collection for you at your local library.