Council Tax Reduction Scheme 2020

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Closes 30 Nov 2019


What is the Council Tax Reduction Scheme?

The Council Tax Reduction Scheme (CTRS) provides a reduction in council tax for residents who are out of work or earning low incomes. Currently, the reduction received is based on over 50 different pieces of information and is unique to the applicant, which means it can also be very difficult to understand. Until recently council tax reduction was assessed and awarded as part of a housing benefit application. Since the introduction of Universal Credit, those receiving Universal Credit have to apply separately for the council tax reduction.

At the moment, we spend £25 million a year on council tax reductions for 22,600 households. Of these, 15,000 households are working age and approximately 72% of those households receive 100% reduction. This means they do not pay a contribution towards council tax.

In addition to council tax reduction, we offer a range of discounts and exemptions to council tax, such as the single person discount for those living alone. Discretionary exemptions have also been applied to foster carers and children leaving care. There are no proposed changes to these discounts and exemptions.

Why are we proposing to change the CTRS?

  • The current CTRS is complex, not up to date and our administration costs are increasing. Through our proposals, we are aiming for a new scheme that is fairer, simpler and more affordable.
  • The current scheme requires lots of information from claimants, making it difficult for households to understand what reduction they should be receiving. For example, we are currently required to do a reassessment for a £1 change in income, with households losing 20p support for every £1 earned above their earning threshold. This makes it difficult for those on changing incomes to budget effectively. It also makes it more costly to administer the scheme, with about 1,000 people’s council tax bills having to be changed every week.
  • The current scheme does not treat Universal Credit claimants the same as those on older style, legacy benefits. If the scheme stays as it is, we estimate that Universal Credit claimants in work would receive on average 9% less support than those in the same circumstances receiving legacy benefits and we do not think that is fair.
  • The Government continues to reduce the funding for the scheme and its administration. It is estimated that we are currently paying £10 million towards the total £25 million cost of the scheme each year with the remainder coming from Government funding. We are committed to continuing this investment to make sure the total amount spent on financial support remains the same, even though the funding from the Government reduces.
  • The cost of processing housing benefit and CTRS claims is currently funded by the Government through a separate grant. This funding is also expected to reduce by over £1 million a year by 2023 (50% of the total grant) leading to a significant cost for the council if the scheme remains the same. We are therefore proposing to reduce administration costs as part of the new scheme design so we can continue to invest the same amount in financial support.
  • The current scheme reduces the level of financial support available if families have adult children living at home, unless they are in full-time education and/or receiving certain benefits. This can put stress on households and also requires a lot of administration to gather evidence of exemptions. So we are proposing to make changes to these deductions for non-dependents.

What are we aiming to achieve with a new scheme?

Through our proposals, we are aiming for a new scheme that is fairer, simpler and more affordable.

Our key aims for a proposed new scheme include:

  • No reduction in the total amount of financial support awarded to those in most need – we will continue to provide £25m in financial support for the poorest households in Camden (including £15m in Government grant)
  • Maintaining our commitment to ensuring the poorest households do not have to make a contribution to Council Tax – over 10,000 out of work and low income households will still not need to pay council tax
  • Delivering fairness and simplicity for claimants on both Universal Credit and legacy benefits
  • Reducing bureaucracy – enabling £500,000 to be saved in staffing and other costs
  • Supporting people’s transition to Universal Credit
  • Supporting young adults to stay with their families in Camden by removing non-dependent deductions for all claimants under 25 years old
  • Targeting financial support at the households with the lowest incomes
  • Providing additional support for families, disabled people and carers – we will not include benefits for children and disability in income calculations
  • Providing greater certainty for those on low pay and incentives for people to work and to progress in work to earn more.