What has changed?
From April 2013, if you are of working age, the amount of support you receive towards council tax may have changed.
The government has reduced the amount of money available to fund council tax support and asking local councils to run their own schemes. So, even if you had not paid council tax previously you may now be liable to pay.
Am I affected?
If you receive one of the following benefits you will not be affected (unless you have a non-dependant living with you) – income support, jobseekers allowance (income based) or employment support allowance (income related).
Anyone who is of working age and does not get one of the above benefits and was claiming council tax support is potentially affected.
If you are entitled to claim state pension credit you will be protected and will be no worse off under the changes.
What are the changes?
The council tax support scheme from April 2013 is as follows:
- Removal of second adult rebate
- Amendments to non-dependant deductions
- Removal of the child benefit disregard
- Removal of earnings disregards
- Reduction of the upper capital limit to £10,000 (currently £16,000)
Claire lives in a three bedroom property with her two daughters Tina who is 8 years old and Rosie who is 11 years old. Her property is in band A and her weekly council tax liability is £16.38.
Claire works 16 hours per week. She has the following income coming into the house on a weekly basis: -
Child tax credit £113.23
Working tax credit £74.05
Child benefit £33.70
Total weekly income £371.31
Under the old scheme
We would have disregarded all of Claire’s child benefit, maintenance and £42.10 of her earnings, making her weekly income for benefit purposes £245.51.
Claire’s weekly income would then have been compared to the government weekly allowance (these are called applicable amounts). Claire’s applicable amount was £218.08 per week.
As Claire’s weekly income was higher than her applicable amount she had ‘excess income’.
£245.51 (weekly income) - £218.08 (applicable amount)= £27.43 excess income.
This excess income was then reduced by 20% or 20p for every pound that Claire’s income was over her applicable amount.
£27.43 x 20% = £5.49.
This £5.49 was then deducted from Claire’s weekly council tax liability.
£16.38 - £5.49 = £10.89. This was Claire’s weekly council tax benefit entitlement. So every week Claire had to put aside £5.49 to pay on her council tax bill.
Under the new scheme
We still disregard Claire’s maintenance. This now makes her weekly income for benefit purposes £321.31.
Using the same calculation as before Claire’s excess income is now:
£321.31 - £218.08 = £103.23 excess income.
£103.23 x 20% = £20.65
£16.38 – £20.65 = £0.00. Claire therefore no longer qualifies for benefit entitlement.
Do I need to make a new claim for council tax support?
Any existing claims or those submitted before 1 April 2013 will have been treated as claims under the new local scheme.
Anyone who now applies for support will be required to make a new claim, under the new local scheme.
Who is entitled to council tax support?
The new scheme is based on the current benefit scheme so anyone with a low income can apply.