27th July 2012

Changes to Dorset, Bournemouth and Poole Council Tax Benefits from 2013 - FAQ

Localising Council Tax Support in Dorset | FAQs
Council Tax Benefit is Changing

What is changing?

From 1 April 2013, the Government is abolishing the national Council Tax Benefits system and asking councils to introduce a local council tax support scheme to replace it. The Government is also giving Councils less money to pay for their new schemes. The funding reduction is equivalent to 10% of current expenditure on Council Tax Benefit. This is a £5.8 million reduction across Dorset, Bournemouth and Poole (approximately £3.2 million for Dorset authorities, £1.6m for Bournemouth, and £1.1m for the Borough of Poole).

No changes will be made to the amount of money central government gives councils to fund each year's scheme, so the local scheme will have to take account of potential increases in the number of people claiming benefit.

What is Council Tax?

Council Tax is a local tax on homes (domestic properties) which helps to pay for local services, such as education, social services, and refuse and recycling collections, as well as contributing towards police and fire services. The amount you have to pay depends on the property band your home is in, which is based on the value of your property. Your local council is responsible for collecting Council Tax.

Who has to pay Council Tax?

Council Tax is usually paid by the occupants of a property. The full tax assumes that there are at least two adults living in the property. If there is only one occupant in the home, they will be eligible for a discount. Council Tax is also paid by the property owner where the property is unoccupied.

What is Council Tax Benefit?

Council Tax Benefit is a means-tested benefit that helps people on low incomes pay their Council Tax. It is administered by local councils using rules set nationally and is fully-funded by the government. Claimants have their Council Tax bill reduced by the amount of their benefit. However, Council Tax Benefit is being replaced by a local council tax support scheme from April 2013.

Who can currently claim Council Tax Benefit?

Anyone who is liable to pay Council Tax may apply for Council Tax Benefit. Couples living together should apply jointly. The amount of benefit they can receive is based on the household makeup, their income and savings, and the charge they are liable to pay.

Why is Council Tax Benefit changing?

Central Government has stated that the existing welfare system is unsustainable and changes are needed to make it affordable in the future. In its emergency budget statement on 22nd June 2010 and the Comprehensive Spending Review statement published 20th October 2010, the Government announced a package of reforms to change the system.

The reforms include the introduction of a new all-encompassing benefit for working age people called Universal Credit. This will replace most of the benefits and tax credits currently in operation to support working age individuals, couples and families who are out of work or on low earnings. The Welfare Reform Act 2012 also contains provision for the abolition of Council Tax Benefit and the Local Government Finance Bill proposes that local councils should construct their own schemes to manage support for Council Tax.

The Government believes this gives councils greater control over their local priorities, increased financial autonomy and a greater stake in the economic future of their local area. It also contributes to the national programme for deficit reduction and is part of the Government's wider agenda to enable stronger, balanced economic growth across the country.

In line with the Government's objective to 'make work pay', the changes to Council Tax Benefit will also support positive work incentives to help get the unemployed back into work.

Who will the changes affect?

All working age people who currently claim Council Tax Benefit will be affected by these changes and might see their benefit change. However, the Government has made it clear that some protection should be given to the most vulnerable in the community. The scheme will give consideration to claimants who are affected by child poverty and/or homelessness, those who have a disability and have a protected characteristic under the Equality Act 2012.

The Government has also recognised that low-income pensioners who are currently eligible for Council Tax Benefit cannot be expected to increase their income through paid work and therefore, are to be protected from any reform.

What is the definition of a pensioner?

For the purposes of Localised Council Tax Support Schemes a pensioner is someone who has reached the qualifying age for state Pension Credit. The qualifying age for state Pension Credit will be taken as the pensionable age for women - currently just over 61. Currently in the case of a couple, one member of the couple needs to be of this age or older in order to be deemed a pensioner couple.

Will other discounts and exemptions be affected?

The existing single person's discount and the exemption for people who are severely mentally impaired and live on their own will not change, and will not form part of the forthcoming consultation.

Who will be able to get the new Council Tax Support?

Anyone who currently receives Council Tax Benefit will be assessed for the new Council Tax Support. It is likely that most people who currently qualify for Council Tax Benefit will receive some Council Tax Support. Anyone liable to pay Council Tax may apply for Council Tax Support and will be assessed in the same way as current claimants moving from Council Tax Benefit.

How much will I have to pay towards my Council Tax?

Depending on how the new scheme is designed, it is likely that most working age people who qualify for Council Tax Support will have to pay more than they do now or they would have done. Pensioners will be protected from the reform and will to continue to make payments based on the existing Council Tax Benefit scheme calculation.

We will contact everyone affected to tell them how much they will have to pay in early 2013.

Will I have to re-apply?

If you currently claim Council Tax Benefit you will not have to re-apply under the new scheme. Your benefit will be automatically reassessed using the new rules.

When will these changes happen?

We need to tell the Government what our new local scheme is by January 2013 and Council Tax Bills giving details of what every household will need to pay will be sent out in March 2013.

Local authorities across Dorset, Bournemouth and Poole are working together to design a scheme that manages the administration of Council Tax Support at a lower cost than the current Council Tax Benefit Scheme, ensuring that the most vulnerable groups are not disadvantaged. A draft scheme will be consulted on in September and October. All Council Taxpayers in Dorset will have the opportunity to share their views on the proposals and help to shape the final scheme that will be agreed by the end of this year.

How can I take part in the consultation?

A consultation questionnaire about the draft scheme will be available on-line after proposals have been published in early September for all who are interested to share their views.

More information about how you can participate in the forthcoming consultation will be publicised nearer the time.

These FAQs will be reviewed and updated as more information becomes available.

Additional information can be obtained from the Department for Communities and Local Government website.