Local Council Tax Support - Scheme

Consultation 2020/21

The Isle of Wight Council asked people to share their views on the future of the Local Council Tax Support (LCTS) Scheme, between June and August 2019. This consultation has now closed. The results of the consultation are now being reviewed and will be considered by the Full Council in November 2019, with a view to bring in any changes in April 2020.

Each year the Council must decide whether to change the Local Council Tax Support (LCTS) scheme for working age applicants in its area. The Local Council Tax Support (LCTS) scheme for Pension Age claimants is set by Government who state we must fully protect pensioners under the same rules that applied to Council Tax Benefit. This means we have no discretion in the help we give people over pension age, as there are nationally set rules for this group.  Therefore, any changes will only affect working age claimants who currently receive LCTS or who may apply in the future, to provide support for people on certain benefits and low incomes. The LCTS scheme was implemented to replace the Council Tax Benefit scheme by the Department for Work and Pensions in 2013. Although Government initially provided funding to local councils for the scheme, the funding has reduced each year in line with the reduction in the Revenue Support Grant provided to councils.

The Department for Works and Pensions (DWP) has introduced Universal Credit to replace six existing benefits. Because the amount of Universal Credit customers receive is reviewed each month by the DWP, this affects the income used to work out LCTS entitlement. It means the number of changes we must make to your LCTS is increasing as more people migrate to Universal Credit. In addition, these changes will be adjusted to the LCTS customer’s council tax account monthly and can increase difficulties for the customer, and the scheme is becoming costlier to run.

We currently have to work out LCTS to the penny, so even small changes in someone’s income may mean a recalculation and slight adjustment to the support we can provide.  If you pay your Council Tax on a monthly basis, then constant changes to your payment plan may increase the difficulties for you of budgeting on a fixed income and cause confusion.  Therefore, consideration of replacing the current scheme with an Income Grid Scheme is one of the options being proposed in the consultation.

These changes could affect just under 5,400 existing working age claimants across the Island. Pension age households will not be affected as the LCTS rules for these claimants are set nationally by the government.

Our current LCTS scheme is complex and difficult to understand. The consultation considered three possible changes that could be made to the scheme from April 2020.

The changes for consideration in the consultation were:

Option 1 - Introduce an 'income grid scheme' for all working age applicants, to replace the current means testing approach.

Option 2 - Introduce an 'income grid scheme' for all working age applicants, to replace the current means testing approach, but with the addition of the following options:

Option 2a - Disregarding Carers Allowance which is currently taken into account as income   

Option 2b - Replacing the three current earnings disregards with a standard £25 disregard, irrespective of a person’s circumstances

Option 2c - Replacing the five current non-dependant deduction rates with a standard deduction of £2 per week for each non-dependant in a household

Option 3 - Disregarding any payment made under the Infected Blood and Thalidomide Regulations in full as income or capital.

More detail and information on these proposals and how they may affect individual working age claimants can be found in the consultation document along with case studies. View the consultation document . (PDF, 435KB, 26 pages).