Council Tax Reduction - income when the working-age rules are used

This advice applies to Scotland. See advice for See advice for England, See advice for Northern Ireland, See advice for Wales

If you or your partner has reached State Pension age

You should check if the working-age rules or the pension-age rules are used to calculate your Council Tax Reduction (CTR).

If you or your partner has reached State Pension age, the pension-age rules usually apply. You can find your State Pension age on GOV.UK.

Even if one of you has reached State Pension age, the working-age CTR rules will apply if you or your partner gets:

  • Universal Credit

  • income-based Jobseeker’s Allowance (JSA)

  • income-related Employment and Support Allowance (ESA)

  • Income Support.

If you’re part of a couple and only one of you has reached State Pension age, for your application to be assessed under the pension-age rules, the person who has reached State Pension age should apply for CTR.

If your CTR is worked out using the pension-age rules, find out how income is treated using the pension-age rules.

When you can get maximum Council Tax Reduction

You'll get the maximum amount of Council Tax Reduction, minus any non-dependent deduction, if you or your partner gets:

  • Income Support

  • income-based Jobseeker’s Allowance (JSA)

  • income-related Employment and Support Allowance (ESA).

If you get one of these benefits, you don't need to work out your income or capital. You should check how to apply for Council Tax Reduction.

How income is treated using the working-age rules

Council Tax Reduction (CTR) is worked out on a weekly basis, so the council converts your income to a weekly amount and applies any earnings disregards.

Your income includes your partner's income but not your children’s.

Your total income includes:

  • some Universal Credit income

  • earned income - for example, pay from work

  • unearned income - like certain benefits.

The rules about calculating your income for CTR are complicated. You can use an online benefits calculator to check how much CTR you might be entitled to. You can find an online benefits calculators on GOV.UK.

To find out more about CTR, contact your local council. Your local council website might have a tool that you can use to calculate how much CTR you can get. You can find your local council on mygov.scot.

Universal Credit income

If you get Universal Credit (UC), some elements in your UC award are counted as income, converted to a weekly amount. For example, the following elements in your UC award are counted as income:

  • child element

  • disabled child addition

  • childcare element

  • transitional protection element.

If your total UC award is less than the value of those elements, then the value of your entire UC award is counted as income.

If you get UC, you won’t get the following earnings disregards:

  • £17.10 earnings disregard which applies to households working over a certain number of hours

  • the special occupation disregard.

Earned income

Earned income is, for example, pay from work and includes payments like Statutory Sick Pay and Statutory Maternity Pay.

If you get Universal Credit (UC) and the Department for Work and Pensions (DWP) shares the information with the local council, the same amounts of earned income used to calculate your UC award are usually used for Council Tax Reduction, converted to a weekly amount. Some earnings are disregarded. 

If you do not get UC, the local council will work out how much earned income you get each week. If this changes from week to week or month to month, you should tell the local council and give details of your earnings so that the council can calculate an average. An earnings disregard is then applied to your weekly earnings.

Earnings disregard

The amount of earnings disregarded depends on your circumstances.

The main disregards you might get are:

  • £5 per week for a single person

  • £10 per week for a couple

  • £20 per week if you get the disability premium, severe disability premium, carer premium or a component in your Council Tax Reduction applicable amount

  • £20 per week if you have a UC award that includes limited capability for work or limited capability for work and work-related activity.

  • £25 per week for a lone parent.

If you're eligible for more than one disregard, only the highest one is applied.

If you do not get Universal Credit, the above disregards are increased by £17.10 per week if:

  • you or your partner gets the 30-hour element of Working Tax Credit

  • you or your partner is 25 or over and works at least 30 hours per week

  • you or your partner works at least 16 hours per week and the applicable amount includes a child premium

  • you’re a lone parent working at least 16 hours per week

  • you or your partner works at least 16 hours per week and qualifies for the disability premium or a component in your applicable amount.

You might also get a disregard for childcare costs. 

Childcare disregard

You might get a disregard for weekly eligible childcare costs, up to a maximum of £275 if there is one child, or £471 if there are 2 or more children.

The local council disregards childcare costs after it has calculated income, including unearned income.

If you get Universal Credit (UC), you’ll get a deduction for childcare costs if you get the childcare element of UC.

If you do not get Universal Credit, you’ll get a deduction for childcare costs if you’re:

  • a lone parent working at least 16 hours per week

  • part of a couple and both work at least 16 hours per week

  • part of a couple and one person works at least 16 hours per week and the other is a patient, in prison or is incapacitated.  

To count as incapacitated, you or your partner must qualify for the disability premium or a component in your applicable amount, or get certain benefits, for example:

  • Adult Disability Payment

  • Armed Forces Independence Payment

  • Attendance Allowance

  • Child Disability Payment

  • Disability Living Allowance

  • 'main phase' Employment and Support Allowance

  • Pension Age Disability Payment

  • Personal Independence Payment.

The disregard applies for a child or children from birth until the day before the first Monday in September following the child's 15th birthday, or 16th birthday if the child is disabled.

The childcare disregard applies only to formal childcare arrangements. You cannot get a disregard for informal care provided by relatives or friends.

Unearned income

Only certain unearned income is counted. 

For some types of unearned income an amount is disregarded first. For example, if you get spousal maintenance and there’s at least one child or young person in your household, £15 is disregarded from your weekly unearned income.

Unearned income that is taken into account includes:

  • Carer’s Allowance

  • Carer Support Payment

  • contribution-based Employment and Support Allowance

  • contribution-based Jobseeker’s Allowance

  • Child Tax Credit - if the child it's paid for is included in your Council Tax Reduction applicable amount

  • most payments of Industrial Injuries benefit

  • Maternity Allowance

  • most pensions, including state pension

  • spousal maintenance

  • some student income

  • Widowed Parent’s Allowance

  • Working Tax Credit

  • regular payments from capital – for example, from an annuity

  • in some circumstances, instalments of capital payments

  • tariff income from capital

  • relevant Universal Credit payments - child element, disabled child element, childcare element, and managed migration transitional element.

Only the amounts of these relevant Universal Credit (UC) payments included in the calculation of your UC award count as unearned income for Council Tax Reduction. If the amount of UC you’re actually paid is less than the total amount of these relevant payments, for example because other income has been deducted or the benefit cap has been applied, then the amount of UC you get is treated as unearned income instead. Other elements of UC are ignored, including the transitional severe disability premium element.

Capital

If you and your partner have capital over £16,000, you cannot get Council Tax Reduction (CTR). Capital under £6,000 is ignored.

If you have capital between £6,000 and £16,000, the local council will calculate income from your capital, called tariff income. Tariff income is counted as a weekly income of £1 for every £250, or part of £250, over £6,000. 

Water and sewerage charges

You might still have to pay water and sewerage charges, even if you get maximum Council Tax Reduction. Read more about help paying for water and sewerage.