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Council Tax Reduction - how your income is worked out if you are not treated as a pensioner

This advice applies to Scotland

The way your income is treated when calculating Council Tax Reduction (CTR) depends on whether you are treated as a pensioner. This is not based simply on your age.

Are you treated as a pensioner for Council Tax Reduction calculations

You are treated as a pensioner for CTR calculations if:

  • you have reached the qualifying age for state pension credit (this might not be your actual age), and
  • neither you, nor your partner is receiving Income Support, income-based Jobseeker's Allowance (JSA) or income-related Employment and Support Allowance (ESA), or Universal Credit (UC), and
  • if you are part of a couple and only one of you has reached the qualifying age for state pension credit, for your application to be assessed under the pensioner rules it should be the person who has reached pension credit age who applies for CTR.

You can find information about the qualifying age for state pension credit on GOV.UK.

If you are not treated as a pensioner for CTR calculations

There are special rules about how your income is treated when calculating CTR if you are not treated as a pensioner.

The local council will need to work out your weekly income to see if you can get CTR and  how much you can get. Your income includes your partner's income.

If your income is the same as, or less than, the amount the government says you need to live on (called your applicable amount) you will receive maximum CTR, but there might be a deduction for any non-dependants who live in your household.

You can find out more about the applicable amount

You can check who is a non-dependant.

If your income is more than your applicable amount, work out the difference between them. Now work out 20 per cent of the difference figure and take this amount from your maximum CTR less any deduction for non-dependants. The result is the amount of your CTR.

Water and sewerage charges

Don’t forget that you might still have to pay water and sewerage charges, collected with your council tax.

More about help paying for water and sewerage

How your income is calculated for CTR

Income usually means money that you get regularly, periodically or as a series of payments. It includes things like earnings and certain benefits, pensions and maintenance. Some income is disregarded, or partly disregarded. This means that all or part of it is ignored, so it is not included in the calculation of your income for CTR. You might still be asked to declare it when applying for a CTR. There are special rules if you get Universal Credit.

Usually, only income that you hold now is counted, but there are special rules that can be used to treat you as still having income or capital that you have given away, or money that you are entitled to but you have not applied for.

To work out how your earnings from employment affects your CTR, your local council must:

  • decide whether or not a payment counts as earnings
  • work out your gross earnings
  • deduct income tax, national insurance and certain pension contributions
  • if you are not paid weekly, convert the result into a weekly amount.

There are special rules for self-employed income.

A one off payment up to £500 for NHS or social care workers working between 17 March and 30 November 2020 has to be disregarded in any calculation for council tax reduction. There is more information about this payment to NHS or social care workers on the Scottish Government website.

If you have capital between £6,000 and £16,000, for example savings, your local council will treat it as a kind of income called tariff income.

The rules about calculating your income for CTR are complicated. Your local council website might have a tool that you can use. If you want more information about how income is treated for CTR, you should get advice at a Citizens Advice Bureau.

Income calculation if you get Universal Credit

If you, or your partner, get Universal Credit (UC), the local council should use your UC maximum amount plus an extra amount for each child or young person in your family.

If your income is 'subject to frequent change', the local council can instead estimate your income over a period of up to 1 year. If you don't agree with how your income has been estimated or don't understand how the average was worked out, you should get advice at a Citizens Advice Bureau.

Are you better off claiming Second Adult Rebate CTR

You should also check if you would be better off claiming Second Adult Rebate instead of main CTR.

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