Children's handbook Scotland
Chapter 1: Benefits and tax credits
5. Council tax reduction
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5. Council tax reduction

Council tax reduction (CTR) is a means-tested scheme to  help low-income households with council tax payments. You can get help through CTR whether or not you are in work, provided you satisfy the conditions of entitlement.

Your local authority is responsible for the administration of CTR.


Who can claim council tax reduction

You qualify for CTR if: you or your partner are liable for council tax for the home in which you live; and you are 'habitually resident' in the UK, Ireland, Channel Islands or Isle of Man, have a 'right to reside' in the UK, and are not a 'person subject to immigration control'. These terms are explained in CPAG’s Welfare Benefits and Tax Credits Handbook; and you and your partner have savings of £16,000 or less, unless you are on guarantee credit of pension credit (PC), in which case your capital is not taken into account; and your income is sufficiently low.


Amount of reduction

The amount of CTR you get depends on your income compared with the amount the law says you need to live on. This section gives a brief outline of how CTR is calculated, so you can see how a change in your circumstances or in your income may affect your entitlement. CTR is calculated in a very similar way to housing benefit (HB – see Cross reference).


Step one: calculate maximum council tax reduction

This is your net weekly council tax liability, after any discounts, reductions and non-dependant deductions have been made.


Step two: if you get some means-tested benefits

If you get income support (IS), income-based jobseeker's allowance (JSA), income-related employment and support allowance (ESA) or PC (guarantee credit), you get your maximum CTR (Step one). In this case, you do not need to continue with the remainder of these steps.


Step three: if you do not get these means-tested benefits

If you do not get IS, income-based JSA, income-related ESA or PC (guarantee credit), you must compare your income with your ’applicable amount’. Follow the same process as for housing benefit (HB –see Cross reference).

The calculation of your CTR is different if you get universal credit (UC). Most UC claimants do not get HB – instead there is a housing costs element in UC. If you get UC, it is important to apply to your local authority for CTR as soon as you can.

For CTR, the local authority must either use the DWP’s figures for your UC maximum amount as your ‘applicable amount’ for CTR, and the DWP’s assessment of your income and capital (both converted to weekly figures), or an estimated average weekly income and estimated UC payment if your income, or that of your partner, frequently changes. In either case, for each child or young person in your family, your applicable amount is increased by £16.73.


Step four: work out your weekly income

Some kinds of income are ignored.

See the relevant chapters of this Handbook for more information on how specific income (eg, fostering allowances and payments from the local authority) is treated.


Step five: calculate your council tax reduction

If your income is less than or the same as your applicable amount, CTR is the amount worked out at Step one – ie, your maximum CTR.

If your income is more than your applicable amount, work out 20 per cent of the difference. Your CTR is the amount you worked out at Step one minus 20 per cent of the difference between your weekly income and your applicable amount.


6. Disability living allowance

Disability living allowance (DLA) is a benefit for people with mobility problems and/or care needs as a result of a disability. For claimants aged between 16 and 64, DLA is being replaced by personal independence payment (PIP – see Cross reference). New claims for DLA can now normally only be made by claimants aged under 16. 

DLA has two components:

a care component, paid at either the lowest, middle or highest rate; a mobility component, paid at either the lower or the higher rate.

You can get either the care component or the mobility component, or both. DLA is not means tested and you do not have to have paid any national insurance contributions to get it.

The Department for Work and Pensions is responsible for the administration of DLA.


Who can claim disability living allowance

You qualify for DLA if:Footnote you are under age 16 when you first claim. Those aged between 16 and pension age may be able to claim PIP and those who have reached pension age may be able to claim attendance allowance; and you satisfy certain UK residence and presence conditions, and are not a 'person subject to immigration control'. See CPAG’s Welfare Benefits and Tax Credits Handbook for details; and you satisfy the disability test for the care component (see below) and/or the mobility component (see Cross reference); and you have satisfied the disability test for the last three months and are likely to continue to do so for the next six months (unless you are terminally ill).


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