Council Tax Reduction: how to cut (or wipe out) your council tax bill

Council tax is one of the largest regular bills many households face, but if you are on a low income you may be able to get it reduced, sometimes to nothing at all. Council Tax Reduction is widely under-claimed, partly because the rules vary from place to place. This guide explains what Council Tax Reduction is, who can get it, and how to claim, so you do not pay more than you have to.

What Council Tax Reduction is

Council Tax Reduction, sometimes called Council Tax Support, is a scheme that lowers your council tax bill if you are on a low income. It is run by your local council, and unlike most benefits it is not part of Universal Credit, so you have to claim it separately from your council, even if you already receive Universal Credit. Depending on your circumstances and your council's scheme, it can reduce your bill by anything up to the whole amount.

How the schemes vary

In England, each council runs its own Council Tax Reduction scheme for working-age residents, so the rules and how much you can get differ from one area to another. Some councils require everyone of working age to pay at least a minimum amount, while others can reduce a bill to zero. In Wales and Scotland there are national schemes that are more consistent. Pensioners are protected by a national framework across Great Britain, and can often have their bill reduced to nothing if their income is low enough.

Who can claim

You can usually claim Council Tax Reduction if you are liable for council tax, on a low income, and have savings below a certain level, although the exact rules depend on your council's scheme. You can claim whether you are working or not, and whether you rent or own your home. Because the schemes vary, it is always worth applying rather than assuming you will not qualify, as you may be entitled to more help than you expect.

How much you can get

How much your bill is reduced depends on your income, your savings, who lives with you, and your council's scheme. The lower your income, the more help you are likely to get. If you receive certain benefits, such as the guarantee part of Pension Credit, you may qualify for a full reduction. Other adults living with you can reduce the amount of help through a deduction, similar to the rules for other housing support.

It is separate from other discounts

Council Tax Reduction is different from the various council tax discounts and exemptions, and you may be able to get both. For example, if you live alone you can get a single person discount of 25% off your bill, regardless of income, and there are discounts and disregards for students, carers, and people with a severe mental impairment such as dementia. These discounts apply first, and Council Tax Reduction can then help with what is left if you are on a low income.

The single person discount and other reductions

It is worth knowing the main council tax reductions that do not depend on income. The single person discount gives 25% off if you are the only adult in your home. A disability reduction can lower your band if your home has features needed for a disabled resident. Certain people are disregarded altogether, such as full-time students and people with a severe mental impairment, which can lead to a discount. Claiming these is separate from Council Tax Reduction, and you should make sure you are getting any you are entitled to.

How to claim

You claim Council Tax Reduction from your local council, usually through an online form on their website, or by phone or in person. You will need details of your income, savings, household and your council tax account. If you are making a new Universal Credit claim, you are sometimes asked whether you want to claim Council Tax Reduction too, but do not rely on this, and apply directly to your council to be sure.

Claim promptly

Council Tax Reduction can usually only be backdated for a limited period, and in some schemes not at all, so claim as soon as you think you might qualify rather than waiting. If your circumstances change, report it to your council, as it can affect your reduction. Claiming promptly makes sure you do not miss out on help you are entitled to and that you are not chased for council tax you should not have to pay.

Second Adult Rebate

In some schemes, if you are the person liable for council tax and you share your home with another adult on a low income who is not your partner and does not pay rent, you may be able to get a Second Adult Rebate. This is based on the other adult's low income rather than yours, and it can help even if your own income is too high for ordinary Council Tax Reduction. It is worth asking your council whether this applies, as it is easily missed.

Reporting changes

Once you receive Council Tax Reduction, tell your council if your circumstances change, such as your income, savings, or who lives with you, as these affect how much help you get. Reporting changes keeps your reduction correct and avoids building up arrears or an overpayment that you would have to repay. As with other benefits, prompt and honest reporting is the simplest way to keep everything right.

Why so many miss out

Council Tax Reduction is one of the most under-claimed forms of help, with large numbers of eligible households not claiming it, often because they do not realise it is separate from Universal Credit, or assume they will not qualify. Because it can be worth hundreds of pounds a year, and sometimes wipes out the bill entirely, it is always worth applying. Do not let an assumption stop you from claiming help you may well be entitled to.

Council Tax Reduction and Universal Credit together

It is worth stressing that getting Universal Credit does not automatically get you Council Tax Reduction. They are run by different bodies, Universal Credit by the DWP and Council Tax Reduction by your local council, so you must claim the council tax help separately. Many people on Universal Credit miss out simply because they assume their council tax is covered. If you are on Universal Credit and pay council tax, make a separate claim to your council straight away.

Check every year

Council tax bills usually rise each year, and your circumstances can change, so it is worth checking your entitlement to Council Tax Reduction and any discounts regularly rather than assuming nothing has changed. A drop in income, a change in your household, or simply a new financial year can all affect what you are entitled to, so a quick annual review helps make sure you are not paying more than you need to.

In short

Council Tax Reduction lowers your council tax bill if you are on a low income, and you claim it separately from your local council, not through Universal Credit. Schemes vary, especially for working-age people in England, and it works alongside other discounts such as the single person discount, so check what you are entitled to and apply promptly.

Where to get help

Your council and Citizens Advice can help you claim Council Tax Reduction and any discounts. For pensioners, claiming Pension Credit can passport you to a full reduction, so see our guide to Pension Credit.