Council tax reduction

Summary of council tax reduction (CTR)

Summary of the Council Tax Reduction Scheme from 1 April 2017 onwards

After a consultation with the Borough’s constituents undertaken over the summer of 2016; the Council introduced, on 1 April 2017, a simplified Council Tax Reduction scheme for working aged applicants, based on an income band system.

Depending on where a household’s total income falls within a range of specified bands, that household may be entitled to relief of up to eighty percent of the annual council tax charge. The maximum amount of reduction is capped at the band D council tax charge. On 1 April 2019 the annual charge for homes on this council tax band is £1,694.32.

In order to assist the neediest households in the borough, it had been agreed that for households in which no one is presently in employment and a member of the household is also a disabled person, the council tax charge up to the Band D cap will be reduced to zero.    

Following a second consultation in the summer of 2018 the Council has subsequently decided that from 1 April 2019, the income bands will increase annually in line with inflation (CPI).

Here you can view and download the Council Tax Reduction Scheme (London Borough of Sutton) 2019 regulations.

Council Tax Reduction for pension age applicants is a national rather than a local scheme, the rules of which are set by Parliament. The Pension age Council Tax reduction scheme can be viewed and downloaded here.

How Council Tax Reduction for working age applicants works in practice:

Add together all of your and your partner’s assets and savings. If this is more than £10,000.00 unfortunately you are not entitled to a reduction. You must pay your annual charge in full.

If you are a care leaver aged under 25, or if you, your partner or a dependent are disabled, and no-one in your household is presently in employment your bill will be reduced by up to the maximum annual rate of £1,694.32. If your bill for the full year is less than this then, subject to any non-dependent deduction, you will pay nothing. if your bill is greater you must pay the difference.

Otherwise the next step is to calculate the amount of your household’s weekly income. This is done by simply adding together all the money regularly coming in to your home. Any money received at frequencies of more than a week e.g. annually, monthly, should be converted to weekly amounts.

If you are self-employed you will normally be treated as earning the equivalent of a working week, of thirty-six hours, paid at the national living wage.

Having added together all your income the next step is to subtract from this weekly amount any income shown in table A below.  

Table A - Income we ignore when calculating your weekly income

DLA (Disability Living Allowance)

PIP (Personal Independence Payment)

£10 of Student Grants/ Loans

Carer's Allowance

75% of child benefit

£20 Income from Boarders or rents

Foster/Guardian and Adoption payments

War disablement & Widows Pension

£20 of earned income (£50 if disabled and/or care leaver)

£50 maintenance for each child

Housing costs and disregarded income from Universal Credit

The final weekly amount is then compared to the table below to determine the amount of reduction you receive which will be between zero and up to eighty percent of the maximum annual cap of £1,694.32.

If your annual charge is greater than £1,694.32 any council tax you are liable for above this amount must be paid in full.

Net Weekly Income

Percentage of maximum reduction (%)

Less than or equal to £158.99

80

£159.00 to £208.99

70

£209.00 to £258.99

60

£259.00 to £308.99

50

£309.00 to £358.99

40

£359.00 to £408.99

30

£409.00 to £458.99

20

£459.00 and over·  

0

However there are two further important limits to the amount of reduction you receive these are;

1. Non-dependent deductions.

The first is that any adult member of your family who lives with you is required to contribute towards the council tax you are charged. These persons are termed non-dependents and the amount they are required to contribute is based on their income.

This contribution is then subtracted from the amount of any reduction you are entitled to, for example; your annual council charge is £801.38 or £15.37 a week, your assets and savings are less than £10,000.00 and your income is £300.00 a week which entitles you to a fifty percent reduction of £7.69 a week. However you share your home with another adult member of your family who is presently not working and required to contribute a further £5.00 each week towards your council tax. This is deducted from the amount you are entitled to give a net weekly reduction to £2.69. Your council tax bill for the year will be £661.12.  

The weekly financial contribution for each non-dependent member of your house will be;

  • £5 - non worker
  • £10.00 - if they have gross annual earnings of £22,999 or less and
  • £30.00 - if they have gross annual earnings of £23,000 or above

2. Start dates of reduction awards.

You cannot be entitled to a reduction without first making an application. Any reduction you are entitled to will begin from the Monday following the date at which you apply, if your circumstances change and you are no longer entitled you must apply again.

Consequently if you are not entitled to a council tax reduction at the start of the year any reduction you receive will be calculated from the date of your application and not apply to you entire bill.

If you have moved into a new property you must apply for a reduction in the same week you are sent your first bill, if you do not apply promptly, you must pay the full charge up to the point at which you make an application.

Example Council Tax Reduction Award.

For example; Mr Pink and his partner, are not presently entitled to a reduction, their home is a band E property and they receive their annual demand for 2019/20 on 25 March 2019 for the full charge of £2,070.83.

As well as his partner Mr Pink lives with his adult daughter. Mr Pink and his partner have assets of less than £10,000.00 and their weekly income totals £340.00 a week. Mr Pink’s daughter does not work.

Mr Pink applies for a council tax reduction on 17 April 2019. Mr Pink is entitled to a reduction of forty percent of the band D charge. Forty percent of £1,694.32 is £677.23 or £13.00 a week less £5.00 for his daughter’s financial contribution.

However because he did not apply until 17 April 2019 Mr Pink is not entitled to a reduction until 21 April 2019. He must pay the full council tax for the first three weeks of the year, the reduction he receives is forty nine weeks at £8.00 a week or £392.00.

Having made a successful application; Mr Pink is sent a reduced demand for the current tax year for £1,678.83.

Start an application for council tax reduction here.