Council Tax Reduction Reversals

In 2013 Council Tax Benefit was replaced with Council Tax Reduction (CTR). Council Tax Benefit was a benefit dealt with under the Housing Benefit and Council Tax Benefit Regulations 2006; national legislation.

Council Tax Reduction is not a benefit, it is a reduction in the amount of council tax payable. CTR is a locally managed scheme and can vary from council to council.

Our scheme can be found below:

 

When CTR is calculated it is used to reduce your council tax bill. CTR is referred to in our letters as a weekly amount. However, it is not applied on a weekly basis.

CTR is applied to the financial year as a lump-sum reduction.

Example:

Simon’s council tax bill for the year is £520 and covers 01 April 2016 to 31 March 2017. He is issued with a bill on 01 April 2016 showing the balance of £520 and the expected monthly instalments based on that amount.

On 25 April 2016 Simon makes a claim for CTR, and is awarded the equivalent of £10 per week from 01 April 2016. His council tax liability for the coming year is reduced by £520 (52 weeks at £10 per week).

As a result of the CTR, Simon receives a bill on 27 April 2016 showing that for April 2016 to 31 March 2017 his council tax liability balance is £0.00 and that no monthly instalments are due to be made.

 

If your CTR award goes up or down, more or less of your liability is covered by the reduction. This means you have to pay more or less of your liability. The adjustment to your bill  following your CTR award changing is what we refer to as a ‘Council Tax Reduction reversal’.

Example:

Simon’s council tax bill for the year is £520 and covers 01 April 2016 to 31 March 2017. He is issued with a bill on 01 April 2016 showing the balance of £520 and the expected monthly instalments based on that amount.

On 25 April 2016 Simon makes a claim for CTR, and is awarded £10 per week from 01 April 2016. His council tax liability for the coming year is reduced by £520 (52 weeks at £10 per week).

As a result of the CTR, Simon receives a bill on 25 April 2016, showing that for April 2016 to 31 March 2017 his council tax liability balance is £0.00 and that no monthly instalments are due to be made.

On 02 September 2016 Simon tells the benefits department that his circumstances changed on 10 June 2016.

Based on the change, Simon’s CTR entitlement goes down to £5 per week from 10 June 2016.

This means that the amount of CTR Simon is entitled to for the period 01 April 2016 to 31 March 2017 changes to:

  • 10 weeks at £10 per week (01 April 2016 to 10 June 2016) + 42 weeks at £5 (10 June 2016 to 31 March 2017) = £310

So Simon’s CTR is now £310 for the period 01 April 2016 to 31 March 2017.

The difference between the original award of £520 and the adjusted award of £310 is £210. Following the adjustment, Simon now has to pay £210 of the £520 total liability for the year.

On 02 September 2016 Simon receives his bill showing the balance of his liability is now £210, and the expected monthly instalments based on that amount.

The lower CTR award has meant Simon now has more of his liability to pay himself.

The adjustment from what Simon had to pay before the change (£0) and what he has to pay after the change (£210) is what we refer to as a CTR reversal.

Until 01 April 2019, CTR was calculated in a very similar way to Housing Benefit and it was not uncommon for both, Housing Benefit and CTR, to be claimed together. The same information was used to calculate entitlement to each of these.

Housing Benefit legislation contains a regulation that allows overpaid amounts to be made non-recoverable in certain circumstances. The overpayment must have been due to ‘official error’ to which the claimant did not contribute, and they could not reasonably have been expected to realise they were being overpaid.

Due to the close nature of CTR and Housing Benefit, the above regulation is often misunderstood as being applicable to CTR reversals as well as to Housing Benefit overpayments. This is not the case.

CTR is controlled by the council’s local scheme. Under our CTR scheme there is nothing saying that CTR reversals can be made non-recoverable. This means that all reversals remain recoverable; regardless of the reason for reversal.

 

The Valuation Tribunal Service is an independent appeal body. However, it can only decide if the council has calculated the CTR in line with the council’s own local scheme. If the council’s scheme does not include anything to say reversals can be made non-recoverable, the Valuation Tribunal Service has no power to make it non-recoverable.