Local council tax support scheme consultation
Local council tax support (LCTS) scheme 2024 to 2025
This consultation opens on Monday 7 August 2023 and closes Monday 2 October 2023.
Please take time to read the background information provided here to help with your responses. We will consider what you tell us both carefully and fully.
The new scheme will start on 1 April 2024.
Please also note that the decisions arising out of this consultation may affect more than just the local council tax support scheme, any additional costs may need to be funded by reductions to council services.
We will consider the impact of the scheme each year and may consult again if we think more changes need to be made.
Having your say
The questionnaire seeks your views and suggestions to help us design the scheme for 2024 to 2025.
We would like the consultation to be as wide as possible and invite responses from all interested parties, including LCTS claimants and potential claimants, council taxpayers, other residents, businesses, town and parish councils, the voluntary sector and advocates and representative groups.
We will also be consulting with the police and crime commissioner who is a statutory consultee and with other support agencies about the proposed options.
If you prefer, you can download and print the Local council tax support consultation questionnaire (PDF, 157KB). Please post your survey to arrive with us no later than Monday 2 October 2023 to: Revenues and Benefits, PO Box 238, Newport, Isle of Wight PO30 9FP
Paper copies will be available at libraries and council offices during the week commencing 7 August 2023.
Background information to consultation
What is this consultation about?
Each year the council must decide whether to change the local council tax support (LCTS) scheme for working age applicants in its area.
The changes will only affect working age claimants who currently receive LCTS or who may apply in the future.
The locally agreed changes we are consulting upon do not affect people of pension age. The LCTS rules for these claimants are set nationally by the government.
The LCTS scheme replaced the old council tax benefit scheme in 2013.
Our current scheme
From April 2020, the LCTS scheme moved from a complex calculation to a simplified banded scheme. This was due to the impact of universal credit on claimants’ council tax accounts and the number of bills they received in a year, as well as providing a more straight-forward scheme to understand.
The grid below shows the level of support applicable to a claimant, dependent on their household makeup and weekly income.
Household |
|---|
| Band | Level of LCTS | Couple with children | Couple with no children | Single parent with two or more children | Single parent with one child | Single person |
|---|---|---|---|---|---|---|
1 | 70% | In receipt of a passported benefit | In receipt of a passported benefit | In receipt of a passported benefit | In receipt of a passported benefit | In receipt of a passported benefit |
2 | 70% | £0 to £290 | £0 to £135 | £0 to
£245 | £0 to
£165 | £0 to
£85 |
3 | 60% | £290.01 to
£340 | £135.01 to £185 |
£245.01 to £295
| £165.01 to
£215 | £85.01 to
£135 |
4 | 40% | £340.01 to
£390 | £185.01 to
£235 | £295.01 to
£345 | £215.01 to
£265 | £135.01 to
£185 |
5 | 20% | £390.01 to
£440 | £235.01 to
£285 | £345.01 to
£395 | £265.01 to
£315 | £185.01 to
£235 |
6 | 0% | £440.01 or more | £285.01 or more | £395.01 or more | £315.01 or more | £235.01 or more |
Claimants who have a total net weekly income less than that in band 2 will receive a discount of 70 per cent against their liability for council tax. This also applies to those applicants in receipt of the following benefits:
- Income support, employment support allowance (income related), job seekers allowance (income based) – band 1 in receipt of a passported benefit.
Other elements of the scheme include:
- Carer’s allowance is treated as disregarded income.
- If a claimant or their partner is in work, £25 per week is deducted from their net weekly income.
- If a claimant, partner or their dependent child is in receipt of a disability-related benefit, £50 per week is deducted from their net weekly income.
- A standard charge of £2 per week is deducted from a claimant’s weekly entitlement if they have a non- dependant adult in their household.
- Claimants with capital or savings in excess of £6,000 will not be entitled to any support.
- LCTS is limited to a level that would be no more than a band C property.
- When calculating income for people that are self-employed, we would continue to apply a ‘minimum income’.
How much does the current scheme cost?
There are currently 9,947 claimants in receipt of LCTS on the Island. This figure is currently fluctuating due to the current economic financial situation of residents, and the need for support to be provided to assist low- income families providing support in paying their council tax.
The gross cost of the scheme last year (2022 to 2023) was £10.2 million.
For this year (2023 to 2024) the cost is budgeted at £11.04 million, considering the increase in council tax from 1 April.
Estimated government funding towards the LCTS scheme during 2023 to 2024 was £5.5 million compared with the cost to the council of the scheme at £8.9 million, there is therefore a funding gap of £3.4 million.
In the council’s budget approved in February 2023, there is a forecast revenue budget gap of £6 million for the three-year period between 2024 and 2025, to 2026 and 2027. It is anticipated that the impact of the COVID-19 pandemic will continue to be felt in the medium term and that there will be ongoing impacts on care services, some sources of income, and both council tax and business rates receipts. This, alongside the highest inflation rates in a decade, will also present a significant challenge for seeking to balance the budget.
Why is a change to the local council tax support scheme being considered?
Decisions about changes to the scheme need to be considered alongside the wider challenges being faced by local authorities.
As government funding continues to decrease, we need to strike a balance between a revised scheme that is fair and affordable for those who receive support, and also for all our residents who receive council services. However, we remain committed to providing the maximum level of support for those with the lowest income.
The options
for consideration
We are putting forward the proposed scheme below for consultation, along with some alternative options. The potential benefits and drawbacks of these are detailed within the questionnaire:
The proposed scheme – Keep the scheme as it is currently.
Alternatives to the proposed scheme:
Alternative 1 – Increasing the maximum level of LCTS from 70 per cent to 75 per cent.
Household |
|---|
| Band | Level of LCTS | Couple with children | Couple with no children | Single parent with two or more children | Single parent with one child | Single person |
|---|---|---|---|---|---|---|
1 | 75% | In receipt of a passported benefit | In receipt of a passported benefit | In receipt of a passported benefit | In receipt of a passported benefit | In receipt of a passported benefit |
2 | 75% | £0 to £290 | £0 to
£135 | £0 to
£245 | £0 to
£165 | £0 to
£85 |
3 | 65% | £290.01 to
£340 | £135.01 to
£185 | £245.01 to
£295 | £165.01 to
£215 | £85.01 to
£135 |
4 | 45% | £340.01 to
£390 | £185.01 to
£235 | £295.01 to
£345 | £215.01 to
£265 | £135.01 to
£185 |
5 | 25% | £390.01 to
£440 | £235.01 to
£285 | £345.01 to
£395 | £265.01 to
£315 | £185.01 to
£235 |
6 | 0% | £440.01 or more | £285.01 or more | £395.01 or more | £315.01 or more | £235.01 or more |
Alternative 2 – Reducing the maximum level of LCTS from 70 per cent to 65 per cent.
| Household |
|---|
| Band | Level of LCTS | Couple with children | Couple with no children | Single parent with two or more children | Single parent
with one child | Single
person |
|---|---|---|---|---|---|---|
1 | 65% | In receipt of a passported benefit | In receipt of a passported benefit | In receipt of a passported benefit | In receipt of a passported benefit | In receipt of a passported benefit |
2 | 65% | £0 to £290 | £0 to
£135 | £0 to
£245 | £0 to
£165 | £0 to
£85 |
3 | 55% | £290.01 to
£340 | £135.01 to
£185 | £245.01 to
£295 | £165.01 to
£215 | £85.01 to
£135 |
4 | 35% | £340.01 to
£390 | £185.01 to
£235 | £295.01 to
£345 | £215.01 to
£265 | £135.01 to
£185 |
5 | 15% | £390.01 to
£440 | £235.01 to
£285 | £345.01 to
£395 | £265.01 to
£315 | £185.01 to
£235 |
6 | 0% | £440.01 or more | £285.01 or more | £395.01 or more | £315.01 or more | £235.01 or more |
There are currently 9,947 claimants in receipt of local council tax support, and 5,369 of these are of working age who would be affected by any changes to the scheme.
- Download the Draft Scheme for Local Council Tax Support (PDF, 1MB)
- Download the First Stage Equality Impact Assessment for Local Council Tax Support 2024 (PDF, 393KB)
- Download the Easy Read explanation of the consultation (PDF, 195KB)
Please see the case studies below showing how the proposed scheme and the alternatives might affect various households. These changes are irrespective of any general council tax increases.
Exceptional hardship fund
All LCTS claimants continue to be able to apply for additional support on a case-by-case basis where they experience exceptional hardship via the exceptional hardship fund. This fund is made available to claimants each financial year regardless of any changes which are made to the LCTS scheme.
Download the Draft Exceptional Hardship Policy 2024 (PDF, 323KB)
Next steps
The consultation closes on Monday 2 October 2023. This is because of the timescales involved and the legal requirement that the council adopts any amended scheme by January 2024 at the latest if it is to take effect from 1 April 2024.
We will listen carefully to what residents tell us. The consultation results will be considered alongside other evidence and information at the Full Council meeting to make the final decision on the 2024/25 scheme.
Following the decision, the full results will be available on the council’s website.
The new scheme will start on 1 April 2024. The council will consider the impact of the scheme annually and consult again if it thinks further changes need to be made.