East Devon District Council - Council Tax Reduction Scheme 2023/24 Consultation

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East Devon District Council - Council Tax Reduction Scheme 2023/24 Consultation

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 for Pension age households is 100% and for working age households 85% of Council Tax.
 
The scheme for working age applicants limits support to a maximum of a Council Tax Band D and applicants who live is premises who have a higher Council Tax band (E,F, G or H) will have any award calculated based on a Band D level.
 
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.
  
East Devon District 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): 

  • To increase the maximum level of support for working age applicants from 85% to 100% and to make changes to the income levels within the 'income - grid' scheme. Both of these changes are designed to provide more support to low income households (Part 1);
  • The scheme will provide more flexibility in applying the Minimum Income Floor (MIF) for self-employed applicants where they are unable to undertake full time work (Part 2);
  • To limit the backdating provision to 12 months (Part 3);
  • The scheme will disregard certain payments paid to taxpayers under special schemes (Local Welfare Provision) (Part 4);  and
  • Where the Government makes emergency increases to national welfare benefits to assist in a crisis, the scheme will give the Council the discretion to disregard those increases if they would have a negative effect of Council Tax Reduction (Part 5).

All other parts of the existing scheme will remain unchanged.

In the East Devon District Council area, almost 8255 people currently receive Council Tax Reduction. The gross cost of the scheme is circa £9.2m which is spread across the County Council (73%), the District Council (7%), Fire (4%) and Police (12%), and 4% going to Parish Councils in accordance with the proportion of Council Tax which each organisation levies (which is shown in brackets).

 Who will this affect?

Working age households in the East Devon District 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 considered continuing with the current scheme - this would provide less support for certain households. The Council feels that it is essential low income households are supported as much as possible at this time.

Part 1 – Increasing the level of support within the Income Grid scheme for all applicants of working age 

As explained in the background information, the Council is primarily consulting on the following proposals to change the existing Council Tax Reduction Scheme from 1st April 2023. This will provide increased support to those households on the lowest incomes.
 
Your responses are a part of this consultation. 
   
The current 'income-grid' scheme for Council Tax Reduction was introduced on 1st April 2020 and it replaced the traditional means-tested scheme which had been in place since the introduction of Council Tax Reduction in 2013.
 
The introduction of the new scheme has been successful albeit that it maintained the maximum level of support for working age applicants at 85%. The scheme has however brought many advantages, not least that: 

  • it assists a large number of households with payment of their Council Tax;
  • it is easy to understand for applicants; and
  • it is administratively efficient.

The Council now proposes to make changes to the scheme to provide more support, especially to those on lower incomes. The scheme will also be adjusted to some degree to allow for increases in income. The changes to the scheme are shown below:  

Table 1 shows current scheme for working age applicants; and

Table 2 shows the proposed scheme for working age applicants.

Table 1 - The CURRENT scheme for working age applicants
   

Band 

Discount

Passported

Single 
(no dependent)

 (weekly
 net income )

Couple
(no dependent)

 (weekly
 net income)

Family with
 one dependent

 (weekly
 net income)

Family with
two or more
dependents

 (weekly
 net income)

1*

85%


 Relevant Benefit
  

£0 - £80

£0 - £80

£0 – £160

£0 – 235

2

80%

N/A

£80.01 - £160

£80.01 - £160

£160.01 – £235

£235.01 - £310

3

55%

N/A

£160.01 - £235

£160.01 - £235

£235.01 - £310

£310.01 - £385

4

25%

N/A

£235.01 - £310

£235.01 - £310

£310.01 - £385

£385.01 - £460

5

0%

N/A

Over £310

Over £310

Over £385

Over £460.00


* 'Relevant Benefitmeans that the applicant or partner is in receipt of Income Support; Income-Based Jobseeker's Allowance or Income Related Employment & Support Allowance
 
Table 2.  - The PROPOSED scheme for working age applicants
   

Band 

Discount

Passported

Single 
(no dependent)

 (weekly
 net income )

Couple
(no dependent)

 (weekly
 net income)

Family with
 one dependent

 (weekly
 net income)

Family with
two or more
dependents

 (weekly
 net income)

1*

100%


 Relevant Benefit
  

£0 - £90

£0 - £130

£0 – £200

£0 – 270

2

80%

N/A

£90.01 - £160

£130.01 - £200

£200.01 – £275

£270.01 - £345

3

55%

N/A

£160.01 - £235

£200.01 - £265

£275.01 - £340

£345.01 - £410

4

25%

N/A

£235.01 - £310

£265.01 - £330

£340.01 - £405

£410.01 - £475

5

0%

N/A

Over £310

Over £330

Over £405

Over £475.00


 * 'Relevant Benefit' means that the applicant or partner is in receipt of Income Support; Income-Based Jobseeker's Allowance or Income Related Employment & Support Allowance
 
It is anticipated that the costs for this proposal will be an increase of £722,859.16. 
 
2960 applicants will gain from the changes, no applicants will lose and 1606 have no change to their entitlement.

 
The benefits of doing this are:

  • It provides more assistance targeted support to those on the lowest incomes; and
  • It retains the advantages of the existing scheme design which is easily understood by all applicants;

The drawbacks of doing this are: 

  • The scheme is more generous in some cases and therefore there will be an increase in scheme costs.

Part 2 - Changes to the Minimum Income Floor for Self Employed applicants 

The current scheme includes a Minimum Income Floor (MIF) for self-employed applicants which, after a year of being in business, expects the applicant’s income to be at least 35 hours per week at the national living wage (or national minimum wage). The rule also applies to applicants who are directors of a limited company who operate in the same way as a self-employed person.
 
In certain cases, the Council feels that some applicants cannot be expected to work for that length of time e.g., where they have to undertake caring responsibilities.
 
This proposal will allow the Council to introduce a 16 hours per week level in those cases. If introduced, the applicant will need to provide the Council with evidence that they are unable to work full time.

 
The benefits of doing this are: 

  • The change will allow the Council more flexibility when dealing with self-employed applicants.
  • It will ensure that the scheme is fairer for those who are unable to work full time.

The drawbacks of doing this are: 

  • It will potentially increase the cost of the scheme

Part 3 - Limiting the backdating of applications to a maximum 12 months 

The Council encourages all taxpayers to make a prompt application for Council Tax Reduction where they require support due to a low income. In certain cases, it maybe that applications are late due to unexpected circumstances. In such cases, the Council has the ability to backdate the claim.
 
The current scheme places no limit on this and the Council feels that by placing a maximum limit of 12 months on any backdate application it would be reasonable for both applicants and limit the costs to the taxpayer.
 
The benefits of doing this are: 

  • The change will still allow the Council to backdate claims for a reasonable period of time where there are unexpected circumstances; and
  • It will limit the costs of the scheme.

The drawbacks of doing this are: 

  • The Council does not feel that there will be any drawbacks as the number of applications for backdate longer than 12 months are rare.

Part 4 - The scheme will disregard certain crisis payments paid to taxpayers (Local Welfare Provision) 

During difficult times and when there is a crisis, the Government makes payments to assist households, this change will allow the Council to disregard such payments so that it will not have an adverse effect on Council Tax Reduction.
 
The benefits of this are: 

  • The change is simple and administratively easy to incorporate within the scheme; and
  • It will ensure that the receipt of these payments will not have an adverse effect by reducing any award of Council Tax Reduction

The drawbacks of doing this are: 

  • There are no drawbacks to this change.

Part 5 - Disregarding emergency increases in national welfare benefits 

Where the Government makes emergency increases to national welfare benefits, the change will give the Council the discretion to disregard those increases if they would have a negative effect on Council Tax Reduction.
 
The benefit of this are: 

  • The change is simple and administratively easy to incorporate within the scheme; and
  • It will ensure that the receipt of these payments will not have an adverse effect by reducing any award of Council Tax Reduction

The drawbacks of doing this are: 

  • There are no drawbacks to this change and it will maintain the level of awards

Alternatives to changing the Council Tax Reduction Scheme 

If the Council maintains the current scheme, it will be less supportive to low-income households and administratively more complex. The proposals set out in this consultation will deliver more targeted support and allow the scheme to be more flexible.

About You 

We collect this information to help us understand the communities that we serve so that services and policies can be delivered to meet the needs of everybody. Please feel free to leave questions that you do not wish to answer. All of the information gathered in this questionnaire is confidential and anonymous.

Your personal information will not be passed on to anyone and your personal details will not be reported alongside your responses.

Next steps.... 

Thank you for completing the questionnaire.
  
The consultation closes at midnight Thursday 15th December 2022.
 
We will listen carefully to what you tell us and take the responses into consideration when making a final decision on the 2023/24 scheme.
  
Following the decision, the full results from the consultation will be available on the Council's website.
  
The new scheme will start on 1 April 2023. The Council will consider the impact of the scheme annually and consult again if it thinks further changes need to be made.

This engagement phase has finished

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