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The law on council tax rebate (CTR)

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What is council tax rebate (CTR)?

In the law a council tax rebate is known as a ‘council tax reduction’ (CTR) but some local authorities call it council tax support. It is administered by the same local authority that issues the council tax bill. CTR reduces the council tax bill of the person who is liable to pay it (normally the owner occupier or tenant). It can reduce the full liability (net of any discount) to a lower figure, including to nil. In England and Wales there are four different kinds of CTR:

  • ordinary (or main) CTR
  • alternative maximum council tax reduction (‘second adult rebate’)
  • local CTR classes
  • discretionary CTR

The first three of these comprise a council’s ‘local scheme’.

The law about local CTR schemes in England and Wales

In England, local councils and in Wales, Welsh ministers, have the power to make a council tax reduction scheme (Local Government Finance Act 1992, s.13A). MHCLG/the Welsh Government set the legal framework (known as the ‘prescribed requirements regulations’) that each local scheme must comply with, including the eligibility conditions relating to immigration status and nationality. The law only allows councils/Welsh ministers to set local scheme rules that relate to the assessment of financial need. A local council cannot set other non-financial qualifying conditions such as a residency requirement (Local Government Finance Act 1992, 13A(2) (England); 13A(4) sch 1B paras 2-4 (Wales); and R (Winder) v Sandwell MBC [2014] EWHC 2617 (Admin)).

Main CTR is compulsory for all pension-age applications in England and all applications (working and pension age) in Wales. The financial conditions are based on housing benefit and local councils cannot vary them (England, Regulation 14, sch 1 paras 1-3; Wales, Regulations 21-25).

Second adult rebate only applies in England and is compulsory for pension-age applications (Regulation 14, sch 1 para 4). It works like a mean-tested discount and is awarded if the liable person is denied a discount only because of the presence of another occupier (a second adult) who has insufficient income to compensate the liable person for their increased liability.

In England and Wales councils can create local CTR classes which can include (in England) main CTR for working-age applicants (or a modified version of it) – and most councils do this. In addition to main CTR (or instead of it in England) local councils can create new CTR classes. A local CTR class can be based on the liable person's membership of a group that is generally at risk of financial need (e.g. old age or disability) or because his/her personal circumstances (e.g. through a means test). It can be a variable amount (such as main CTR) or a fixed discount (e.g. 25%, 50%, 100%).

In England the overall result is that:

  • All local councils must provide main CTR and second adult rebate for pension-age applicants as part of their local scheme. The financial conditions are set by the ‘prescribed requirements’ and cannot be changed.
  • Most councils provide main CTR for working-age applicants – but with modified financial conditions (typically a fixed percentage of the full liability).
  • Some councils also provide one or more local classes – often based on membership of a group at general risk of financial need (such as a 100% reduction for young care-leavers).
  • Some councils have replaced working-age main CTR with their own CTR class and test of financial need (typically a fixed discount awarded according to set income bands).

In Wales:

  • All councils must provide main CTR as part of their local scheme for both working-age and pension-age applicants and cannot vary the financial conditions (except to make them more generous).
  • There is no second adult rebate (unless it is reintroduced as a local class).
  • Some councils provide one or more local CTR class alongside main CTR (based on either a general class or personal circumstances.

In England and Wales, before the start of the financial year in which it will apply, each council must publish its local scheme rules (England, Local Government Finance Act 1992, sch 1A paras 3(3), 5(1); Wales, Regulations 13, 17).

Discretionary council tax reduction

Discretionary CTR (DCTR) is not part of a local council’s ‘council tax reduction scheme’ (Local Government Finance Act 1992, s13A(1),(2),(4),(9)) but all councils in England and Wales must provide it. Like other forms of CTR the liable person must make an application for it (usually online or in writing).

DCTR can be awarded even if the liable person is not eligible for a local scheme award and it can reduce his/her council tax to nil even if the local scheme does not cover the full liability (Local Government Finance Act 1992, s13A(1)(c),(6)).

The eligibility rules regarding immigration status and the right to reside do not apply to DCTR (Local Government Finance Act 1992, s 13A(1)-(5),(9), sch 1A paras 1, 2, sch 1B paras 1,3). DCTR does not count as public funds for immigration control purposes because it is not part of a ‘local scheme’.

Who is eligible for local scheme CTR?

The rules about eligibility for CTR are in the Council Tax Reduction Schemes (Prescribed Requirements)(England) Regulations 2012 and the Council Tax Reduction Schemes and Prescribed Requirements (Wales) Regulations 2013 and mostly mirror those for universal credit and housing benefit (although there are some small differences). These rules only apply to the local scheme (main CTR, second adult rebate and local classes) but not DCTR.

A person is ineligible for local scheme CTR if:

  • s/he is ‘subject to immigration control’; or
  • s/he is ‘treated as not being in Great Britain’.

For CTR purposes ‘subject to immigration control’ has the same meaning as for universal credit and like UC nationals of ECSMA or CESC treaty states (i.e. North Macedonia and Turkey) are excepted and entitled if they have leave or some other right to reside (England, Regulation 13(1),(1A),(2); Wales, Regulation 29).. A person is treated as being/not being in Great Britain in the same circumstances as for universal credit except that s/he is also exempt from this requirement if:

  • s/he is in receipt of income support or income-based ESA;
  • s/he is in receipt of income-based JSA and has a right to reside other than an EEA right to reside based on being: a jobseeker, Zambrano carer or resident during his/her first three months in the UK;
  • s/he is a Crown servant, or a member of HM armed forces posted overseas.

(England, Regulation 12(4),(5)(a)-(ha),(6); Wales, Regulation 28(4),(5)(a)-(g),(j)-(l),(6)).

The effect of the EU Settlement Scheme

As with UC/HB, a person who has been granted EU Settled Status is eligible for CTR (regardless of whether s/he has any other right to reside) provided that s/he is also habitually resident (England, Regulation 12(3); Wales, Regulation 28(3)). Also as with UC/HB a person with pre-settled status is not entitled to CTR unless s/he has some other right to reside, but this rule only applies to an award from 1 April 2020 when the law was changed (England, SI 2020 No 23, reg 6; Wales, SI 2020 No 16, reg 6).

Other matters (applications, claims by couples, etc.)

A person must make an application for CTR to be entitled to it, by completing an online or written form and sending it to the authority who issues the council tax bill (a claim for universal credit is not a claim for CTR). The applicant must submit any documents reasonably required to complete their claim (England, sch 7 paras 1-7; Wales, sch 12 paras 1-7). The applicant must also provide his/her national insurance number and that of his/her partner – the rules about this are same as for housing benefit (England, sch 8 para 7(2),(3); Wales, Regulation 113(2),(3)).

If the liable person is a member of a couple, the law about local scheme CTR works in the same way as for housing benefit (England, sch 8 para 4(1); Wales, sch 13 para 1(1)).

The authority must include any child who would be part of the applicant’s household if s/he claimed HB (England, Regulations 7,8; Wales, Regulations 7,8).