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 here).

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’. If you are not on universal credit (UC), follow the same process as for HB (see here).

The calculation of your CTR is different if you get UC. If you get UC, it is important to apply to your local authority for CTR as soon as you can.

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 £17.07 (or a higher amount if the two-child limit applies to the child). See the relevant chapter of this Handbook for information on how your UC applicable amount is affected in specific circumstances.

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.