Council tax reduction: how to apply and what you'll get

Council Tax Reduction (CTR) is income-based support that can reduce your council tax bill by up to 100% if you're on low income or claiming benefits.

What is Council Tax Reduction?

Council Tax Reduction (CTR) is a means-tested benefit that reduces your council tax bill if you're on low income or claiming benefits. It replaced Council Tax Benefit in 2013. Unlike exemptions (which apply to specific property or occupier types), CTR is based on your household's financial circumstances.¹

You can get up to 100% reduction (£0 council tax bill) if your income is low enough. Partial reductions are common for working households on low income. Each council runs its own CTR scheme, so rules vary slightly by area (but the core principles are the same).

CTR is different from Council Tax Support (Scotland's equivalent) and is separate from Housing Benefit (which helps with rent). You can claim CTR and Housing Benefit at the same time.

Who is eligible for Council Tax Reduction?

You must meet all of these conditions to qualify for CTR:

• You're liable to pay council tax (your name is on the bill, or you're the homeowner/tenant)
• Your income is below the council's threshold (typically £200-300/week for working-age, higher for pension-age)
• Your savings are below the council's limit (typically £6,000-£16,000 for working-age, no upper limit for pension-age)
• You live in the property as your main home

Most councils have two schemes: one for working-age applicants, one for pension-age applicants. Pension-age schemes are more generous (no upper savings limit, higher income disregards).

Maximum reduction

Up to 100% (£0 council tax bill)

Savings limit (working age)

£6,000-£16,000 depending on council

Savings limit (pension age)

No upper limit (but savings over £10,000 count as income)

Backdating

Usually 1-3 months before application date

Income thresholds and how much you'll get

CTR is calculated based on your net income (after deductions) and your applicable amount (a figure set by the council based on your household size, age, disability, and whether you have children).

Simplified formula:

• If your income is below your applicable amount, you get 100% reduction (maximum CTR)
• If your income is above your applicable amount, you get a partial reduction. For every £1 your income exceeds the applicable amount, your CTR reduces by 20p (this is called the taper rate)

Example 1: Single person on Universal Credit

Applicable amount: £84.80/week (2026 rates). Income: £84.80/week (UC standard allowance, no other income). Result: 100% reduction (£0 council tax bill).

Example 2: Working family with 2 children

Applicable amount: £180/week (includes children, childcare costs). Income: £220/week (wages after tax). Excess income: £40/week. Taper: £40 × 20% = £8/week reduction in CTR. If council tax is £30/week, you pay £30 - £8 = £22/week.

Example 3: Pension-age couple

Applicable amount: £255/week. Income: £200/week (State Pension only). Result: 100% reduction (income below applicable amount).

Each council publishes its own CTR scheme rules. Check your council's website for the exact applicable amounts and taper rates in your area.

What counts as income?

CTR assessments count most types of income, including:

• Wages and salary (after tax, National Insurance, pension contributions)
• Self-employment income (after allowable expenses)
• Benefits (Universal Credit, Employment and Support Allowance, Jobseeker's Allowance, Child Benefit)
• Pensions (State Pension, workplace pensions, private pensions)
• Rental income from lodgers or second properties
• Maintenance payments

Some income is disregarded (not counted):

• Disability Living Allowance (DLA) and Personal Independence Payment (PIP)
• Child Benefit (in some councils)
• First £25/week of earnings (working-age schemes often disregard a portion of earnings to encourage work)
• War pensions and armed forces compensation

Savings over £6,000 (working-age) or £10,000 (pension-age) generate assumed income. For every £250 or part of £250 above these thresholds, the council assumes you earn £1/week in interest (called tariff income).²

Savings limits

Your savings (bank accounts, ISAs, stocks, bonds, property other than your home) affect CTR eligibility:

• Working-age: Most councils set the upper limit at £6,000 or £16,000. Savings over the limit disqualify you from CTR (you cannot get any reduction).
• Pension-age: No upper limit. Savings over £10,000 count as tariff income (£1/week per £250), but you can still claim CTR even with high savings if your income is low.

What counts as savings:

• Cash in bank accounts and building societies
• ISAs, premium bonds, stocks, shares
• Property you own (other than your main home)
• Value of a business you own

What doesn't count:

• Your main home (the property you live in)
• Personal belongings (car, furniture, jewellery for personal use)
• Funeral plans

How to apply for Council Tax Reduction

Apply via your local council. Most councils offer online applications, phone applications, or paper forms. Steps:

1. Find your council's CTR application page (search "council tax reduction" + your council name)
2. Complete the application form (you'll need details of your income, savings, benefits, household members)
3. Provide evidence (wage slips, benefit award letters, bank statements, tenancy agreement)
4. Submit the application
5. Wait for a decision (typically 2-4 weeks)

If you're already claiming Universal Credit or Housing Benefit, some councils will automatically check if you qualify for CTR. Others require a separate application.

When to apply

As soon as your income drops or you start claiming benefits (CTR is usually backdated 1-3 months max)

Evidence needed

3 months' wage slips or 3 months' bank statements, benefit award letters, proof of savings

Decision time

2-4 weeks (councils must decide within a reasonable time)

What evidence do you need?

Councils typically ask for:

• Income: Last 3 months' wage slips, or SA302 tax calculation if self-employed, or benefit award letters
• Savings: Bank statements for all accounts (last 3 months), ISA statements, shares valuation
• Household: Proof of who lives with you (tenancy agreement, mortgage statement, council tax bill showing names)
• Benefits: Universal Credit award letter, Pension Credit award letter, DLA/PIP award letter

If you cannot provide evidence (e.g., you've lost your wage slips), contact the council and explain. They may accept alternative evidence or contact your employer directly.

How long does Council Tax Reduction last?

CTR lasts as long as your circumstances stay the same. If your income, savings, household composition or benefits change, you must tell the council within 21 days. The council will recalculate your CTR.

Common changes that affect CTR:

• You start work or your wages increase
• You stop claiming benefits or your benefit amount changes
• Someone moves in or out of your household
• Your savings increase above the limit
• You move house

Most councils review CTR annually. You'll receive a renewal form asking you to confirm your income and savings. Return it by the deadline to continue receiving CTR.

What if your application is rejected?

If your CTR application is rejected, the council will send a decision letter explaining why. Common reasons for rejection:

• Your income is too high (above the threshold for your household size)
• Your savings are over the limit
• You didn't provide enough evidence
• You're not liable to pay council tax (e.g., you're a lodger, not a tenant)

You can challenge the decision by:

1. Asking the council to reconsider (write to the council tax team and explain why you believe you qualify, provide additional evidence if available)
2. Requesting a formal review
3. Appealing to the Valuation Tribunal if the review is rejected

You must continue to pay council tax during the dispute. If you win the appeal, you'll get a refund backdated to your application date.³

Council Tax Reduction vs exemptions vs discounts

It's easy to confuse CTR with exemptions and discounts. Here's the difference:

• Council Tax Reduction (CTR): Income-based support (means-tested). Reduces your bill by up to 100% based on your income and savings. You must apply and provide evidence.
• Exemptions: Specific circumstances where you pay £0 (students, severely mentally impaired, empty properties). Not income-tested. Based on property or occupier type.
• Discounts: Percentage reductions based on household composition (25% single person discount, 50% second home discount). Not income-tested.

You can claim CTR and a discount at the same time. For example, if you're a single person on low income, you get the 25% single person discount first, then CTR is calculated on the reduced amount.

Second Adult Rebate

Some councils still offer Second Adult Rebate (a form of CTR where you get a reduction if you live with a low-income adult who is not your partner). Most councils abolished this after 2013, but a few still offer it. Check your council's CTR scheme rules.

Last reviewed: 2026-05-18