How Council Tax Reduction works in the UK
Council Tax Reduction (CTR), formerly known as Council Tax Benefit, is a means-tested local government scheme that helps low-income individuals and families pay their council tax. Local councils across England, Scotland, and Wales administer their own localized schemes for working-age claimants, while national statutory rules protect state pension-age claimants.
Your entitlement depends on your household living allowance (called the statutory applicable amount), your total net weekly income, and your savings. If your weekly income is at or below your applicable amount, you receive maximum Council Tax Reduction. If your income exceeds your applicable amount, your reduction is reduced by 20% of your excess income.
Worked example of Council Tax Reduction
Consider a single adult of working age living in a property with an annual Council Tax bill of £2,171.00 (a weekly liability of £41.75). The claimant has £2,000.00 in bank savings and a net weekly income of £120.00 from part-time work.
The statutory applicable amount (living allowance) for a single adult is £90.50 per week. Because savings are below £6,000.00, no tariff income is added. Weekly excess income is £29.50 (£120.00 minus £90.50). Under the standard 20% statutory taper, £5.90 is deducted from the weekly support (£29.50 multiplied by 20%). The claimant receives a weekly Council Tax Reduction of £35.85, representing an annual saving of £1,864.20. The remaining annual council tax to pay is £306.80, payable as 10 monthly instalments of £30.68.
Applicable amounts and the 20% excess income taper
The applicable amount represents the baseline weekly income the government estimates a household needs to cover basic living expenses. It comprises standard personal allowances for single claimants (£90.50), couples (£142.25), and pensioners (£235.20), plus statutory additions of £76.50 for each dependent child and disability premiums where applicable.
Under the standard scheme, for every £1 that your net weekly income exceeds your applicable amount, your council tax reduction is reduced by 20 pence (a 20% taper rate). Pensioners on Guarantee Pension Credit typically receive 100% maximum Council Tax Reduction regardless of income.
Capital limits and savings rules
Council Tax Reduction has strict capital and savings limits. If you have total capital and savings exceeding £16,000.00, you are normally disqualified from receiving any Council Tax Support, unless you receive the Guarantee Credit element of Pension Credit.
If your savings are between £6,000.00 and £16,000.00, HMRC and DWP rules apply tariff income. For every £250 (or part thereof) of savings above £6,000.00, £1.00 per week is treated as assumed income and added to your total weekly income when applying the means test.
To check standard band ratios and single person discounts, visit our Council Tax calculator.
For full income tax bands and Personal Allowance thresholds, see the UK income tax calculator.
To calculate take-home pay and employee National Insurance, use our UK tax and NI calculator.
Inputs for the council tax reduction calculator
Annual council tax charge
Your home full annual council tax bill before discounts or reductions.
Household composition
Your living arrangements, determining the statutory applicable amount living allowance.
Number of dependent children
Each dependent child adds a statutory allowance to your household living allowance.
Net weekly household income
Total weekly take-home wages, self-employed earnings, and taxable benefit payments.
Total capital and savings
Bank savings, investments, and shares. Capital above £16,000 disqualifies you from support.
CALCULATOR QUESTIONS
UK council tax reduction calculator questions
What is Council Tax Reduction?
Council Tax Reduction (or Council Tax Support) is a local council discount scheme that helps people on low incomes or receiving certain benefits pay their Council Tax.
What is the capital limit for Council Tax Reduction?
The upper capital limit is £16,000. If your combined savings and investments exceed £16,000, you cannot normally receive Council Tax Reduction, unless you receive Guarantee Pension Credit.
How is Council Tax Reduction calculated?
Your council compares your net weekly income with your statutory applicable amount (living allowance). If income exceeds your living allowance, support is reduced by 20% of the excess.
Can I get Council Tax Reduction on Universal Credit?
Yes. Universal Credit does not include council tax support automatically. You must submit a separate application directly to your local council to claim Council Tax Reduction.
Do pensioners get full Council Tax Reduction?
Pensioners who receive the Guarantee Credit element of Pension Credit generally qualify for 100% Council Tax Reduction, covering their entire council tax bill.