Millions of low-income households will face a council tax rise of up to £600 a year from April, according to research from the Resolution Foundation think-tank. How will the council tax changes affect you?
Those in low-paid jobs or on benefits who currently pay little or no council tax will be hit with higher council tax demands in three out of four local authorities in England.
Why are council tax bills going up?
At present, lower-income households pay a reduced (or sometimes zero) amount of council tax through a system called ‘council tax benefit’. Council tax benefit is managed and paid for by central government.
From April, this will change. ‘Council tax benefit’ will be replaced by ‘council tax support’. What this means is that responsibility for helping low-income households pay their council tax is being passed from central government to local councils. The problem is, the money that central government has given to councils to support low-income households has been cut by 10%.
Many councils have complained that they have little choice but to pass on this 10% benefit funding cut onto low-income households, hitting the poorest hardest.
However Brandon Lewis, Local Government minister, said: “Spending on council tax benefit doubled under [Labour] and welfare reform is vital to tackle the budget deficit we have inherited. Under the last administration, more taxpayers’ money was being spent on benefits than on defence, education and health combined.
“We are ending the something for nothing culture and making work pay.”
The government argues that these changes will give councils an incentive to help people off benefits and get into work.
Will I be affected by the council tax rise?
Currently over five million people claim council tax benefit – and approximately half of those claimants currently pay no council tax at all. (On average, council tax benefit is currently worth £820 a year, or £15.80 a week.)
This policy will leave families across the UK unable to pay their bills and is a huge blow to the already squeezed family budget
Gemma Johnson, MyFamilyClub
If you receive council tax benefit, are in a low-paid job or on benefits and currently pay little or no council tax, you may well be hit with a higher council tax bill from April this year.
Different councils have different plans, so to some extent how much extra you pay will depend on where you live.
In Wales, the government is absorbing the cost of the cut and so it won’t be passed on to councils. In Scotland, the government will share the cost with councils in order to protect low-income residents.
There’s less good news for England. While some English councils aim to absorb the cost, most will introduce significant cuts to council tax benefit. According to research from the Resolution Foundation think-tank, of the 184 councils they surveyed in England, 74% will demand a new or higher payment from those on low incomes.
How much will the council tax changes cost me?
Hard to say how much the council tax changes will cost you at this point. As mentioned above, different councils will have different plans on how they implement the 10% cut – so it will depend on where you live. Your local newspaper and council should be covering developments in your area in detail (this is a controversial policy!).
If you want more information you can contact your local council – you can find the contact details of your local authority here.
However some approximate figures are available. The Resolution Foundation calculates that:
- Those who currently receive full council tax benefit and pay no council tax will face annual council tax bills of between £96 (£1.80 a week) and £255 (£4.90 a week).
- Single parents on the minimum wage working part-time with children in childcare will see increases in their council tax payment ranging from £96 (a 55% rise) to £557 a year (a 333% increase), depending on how their local council decides to implement the cut.
- A couple with children where only one partner is in full-time work on the national minimum wage will see an increase in their annual council tax bill ranging from £96 (an increase of 12% on their current payment) to £304 (an increase of 37% on their current payment).
My budget’s stretched as it is. What can I do to cope with the council tax rise?
First, it’s worth taking 15 minutes to do a quick check online to see whether you’re getting all the benefits you’re entitled to. Use this handy online benefits calculator. It’s worth doing as literally billions of pounds worth of benefits go unclaimed each year. Are you getting everything you’re entitled to? Many people aren’t – if your household income is less than £66,000, you could be due some extra help.
Secondly, check whether you’re in the right council tax band. A surprising amount of people aren’t, and lowering your band can save you hundreds or even thousands of pounds.
Thirdly, there are hundreds of grants out there for families struggling on a low income – many of them specific to local areas. Turn2Us have a useful grants search tool which sifts through hundreds of grants for you. Also don’t forget to look at MyFamilyClub’s Benefits and Savings section, for tips on everything from how to slash your childcare costs to how to find out if you’re one of the one million people who is entitled to housing benefit but aren’t claiming it.
Gemma Johnson’s view, MyFamilyClub
“The recent changes to child benefit have seen families up and down the country face a further knock to household incomes. If most councils will pass on this 10% funding cut as the research suggests then millions of the country’s poorest families who are already very close to the edge will find it near impossible to cope.
“This policy will leave families across the UK unable to pay their bills and is a huge blow to the already squeezed family budget.”
What do you think of the council tax changes? Let us know below or email us at [email protected]