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Council Tax Reduction Scheme consultation

People of working age on a low income or who claim benefits can apply to pay less Council Tax – this scheme is called Council Tax Reduction.

We reviewed the local scheme for working-age people and have now agreed the scheme to run in 2023.

A new banded scheme for working age applicants will come in to force from 1 April 2023 and will provide 100% Council Tax Relief to the lowest income households across the district.

Pensioners are not affected by this change as they follow a prescribed national scheme.


A consultation was held in 2022 on moving Council Tax Reduction to a simplified banded scheme. The survey closed on Sunday 30 October 2022.

The results have been reviewed and are available here.

Background information for the 2022 consultation

What is this consultation about?

Each year North Herts Council must decide whether to change the Council Tax Reduction scheme for working age applicants in its area with Pension Age applicants seeing no changes as they are part of the national scheme. This year the Council has decided to significantly change the working age Council Tax Reduction Scheme to:

  • provide additional support to those households on the lowest incomes
  • make the scheme easier for residents to understand and access;
  • provide greater stability to those who are in receipt of support;
  • make the scheme work better with the Universal Credit award system;
  • build in capacity to better manage increase in demand;
  • reduce administration costs which will ultimately prevent any additional costs being added to the Council Tax.

What is Council Tax Reduction?

Council Tax Reduction is a discount for Council Tax. The level of discount is based on the income of the household. Currently the maximum discount is for Pension age households is 100% and for working age households 75% of Council Tax.

Some working age cases are able to receive up to 100% support under the current scheme namely where the following conditions are met:

  • The applicant or partner is in receipt of a disability premium within the calculation of council tax reduction or within any means tested benefit (Housing Benefit, Income Support, Employment and Support Allowance (Income Related) or Job Seeker’s Allowance (Income Based)); or
  • The applicant, partner or any dependant is in receipt of an enhanced disability premium within the calculation of Council Tax Reduction or within any means tested benefit (Housing Benefit, Income Support, Employment and Support Allowance (Income Related) or Job Seeker’s Allowance (Income Based)); or
  • The applicant or partner is in receipt of a support component within the calculation of Council Tax Reduction or within their Employment and Support Allowance; or
  • The applicant, partner is in receipt of a disabled child premium in respect of any dependant within the calculation of Council Tax Reduction or within any means tested benefit (Housing Benefit, Income Support, or Job Seeker’s Allowance (Income Based).

The Council can only make changes to the working age scheme as the Council Tax Reduction Scheme for pensioners is prescribed by Government.

Why is a change to the Council Tax Reduction Scheme being considered?

Councils are required to review their schemes each year and decide if they want to make any changes. Before any changes can be implemented, they must be subject to public consultation.

North Herts Council is proposing a number of changes to its existing scheme. The Council has a duty to consult you and provide you with the opportunity to tell us your views on the proposed changes to our Council Tax Reduction Scheme.

The Council is consulting on the following changes to its scheme for 2023/24 (more detail on the change proposals is given further in the consultation):

  • Introducing an income ‘grid’ scheme for all working age applicants replacing the current scheme which was based on the previous Council Tax Benefit Scheme. This will provide up to 100% support in certain cases (Part 1);
  • To limit the number of dependent children used in the calculation of support to three for all working age applicants to provide consistency with the Department for Work and Pensions benefit schemes (Part 2);
  • There will be no charges made where an applicant had non-dependants living with them (Part 3);
  • Disregarding the housing element of Universal Credit (in the same way that Housing Benefit is not considered income) (Part 4);
  • Replacing the current earnings disregards (also known as a work allowance) with a standard £50 disregard for all applicants where they are in work (Part 5);
  • Removing the Extended Payment provision (Part 6);
  • Calculating all new claims and changes in circumstances to be effective of the day of the change in line with the discount schemes, rather than the current (benefit based) weekly basis (Part 7);
  • Protecting disabled persons by disregarding Personal Independence Payments or Disability Living Allowance and providing a further disregard of £50 per week where either the applicant, partner or dependant is in receipt of the disability benefit (Part 8);
  • Protecting carers by fully disregarding any Carer’s Allowance and the support component for those applicants in receipt of Employment and Support Allowance in the calculation (Part 9);
  • Continuing to protect War Pensioners by disregarding War Pensions or War Disablement pensions in full and by enabling up to 100% support to be granted in some cases (Part 10).

In the North Herts area 7,265 people currently receive Council Tax Reduction. The gross cost of the scheme is £7.77m which is spread across the County Council 76.4%, the District Council 12.5% and Police 11.1%.

Who will this affect?

Working age households in the North Herts Council area who currently receive or will apply for Council Tax Reduction.

Pension age households will not be affected as central Government prescribes their scheme.

Are there any alternatives to changing the existing Council Tax Reduction Scheme?

We have thought about other options. These have not been completely rejected (including maintaining the current scheme) and you are asked about them in the questionnaire, but, at the moment we do not think we should implement them for the reasons given.

We have considered:

  • Continuing with the current scheme

This would mean less support for certain households. The current scheme does not work effectively with the Government’s Universal Credit system. The multiple changes in Universal Credit inevitably lead to multiple changes in Council Tax Reduction which also impact collection of the charge. This would increase the costs for all Council taxpayers in the area paying towards the scheme. The decision to increase Council Tax is taken by Full Council however increases above a government set threshold need to be made by voting in a local referendum; or

  • Reduce funding to other Council services to pay for additional administration costs

Keeping the current Council Tax Reduction Scheme will mean an increase in administration costs and less money available to deliver other Council services.

Other income-based scheme models

The Council is of the opinion that this particular income-based scheme provides both a high level of support to those on the lowest incomes whilst also providing an easy to understand and simple to administer scheme.

Income bands for single person

Band Discount Single person Single person + 1 child Single person + 2 children Single person + 3 children
1 100% £0 to £100.00 £0 to £165.00 £0 to £220.00 £0 to £330.00
2 75% £100.01 to £180.00 £165.01 to £245.00 £220.01 to £300.00 £330.01 to £385.00
3 45% £180.01 to £240.00 £245.01 to £305.00 £300.01 to £360.00 £385.01 to £445.00
4 25% £240.01 to £300.00 £305.01 to £365.00 £360.01 to £420.00 £445.01 to £505.00
5 0% Over £300.01 Over £365.01 Over £420.01 Over £505.01

Income bands for a couple

Band Discount Couple Couple + 1 child Couple + 2 children Couple + 3 children
1 100% £0 to £140.00 £0 to £205.00 £0 to £260.00 £0 to £340.00
2 75% £140.01 to £220.00 £205.01 to £285.00 £260.01 to £340.00 £340.01 to £395.00
3 45% £220.01 to £280.00 £285.01 to £345.00 £340.01 to £400.00 £395.01 to £455.00
4 25% £280.01 to £340.00 £345.01 to £405.00 £400.01 to £460.00 £455.01 to £515.00
5 0% Over £340.01 Over £450.01 Over £460.01 Over £515.01