Council Tax Reduction Scheme 2025/26 Consultation

Overview

Background – our financial emergency

In November 2023, Somerset Council declared a financial emergency due to the increasing costs of providing many services, including social care.

We were able to set a budget for this coming financial year (2024-25) by taking a number of difficult decisions to find savings by reducing services or raising fees and charges.

We also need to use £81.9m of one-off funding. This includes spending reserves (a council’s equivalent of savings) and selling assets or borrowing to pay for everyday running costs.

As many of these measures are one-off, this means our financial challenges will continue into the future, with a projected gap of £103.9m for 2025-26.

We know we need to find further savings and Councillors have already agreed to ask the public for views about possible changes to the Council Tax Reduction Scheme for 2025/26.

What is Council Tax?

Council Tax is a property-based tax which all householders (both homeowners and tenants) normally have to pay if they are over 18.

A full Council Tax bill is based on at least 2 adults living in a home. Spouses and partners who live together are jointly responsible for paying the bill.

What is the Council Tax Reduction Scheme?

If you are on a low income, you can apply for Council Tax Reduction. This means that you pay less in Council Tax.

The Government makes the rules for how much Council Tax Reduction low-income pensioners could get.

Somerset Council makes the rules for how much Council Tax Reduction working age residents on a low income could get.

The purpose of this consultation is to ask for your views on possible changes to Council Tax Reduction support for working age residents.

The support provided for pensioners will not be affected.

What changes are being considered?
 

We recognise the value of the Council Tax Reduction Scheme to residents on low incomes. However, due to our financial situation we are having to look for savings in all areas, including reducing or stopping much valued and important services.

In Somerset, there are currently 32,241 Council Tax payers receiving Council Tax Reduction. This costs Somerset Council around £29m a year (based on current Council Tax levels).

In this consultation we are asking for views on several proposals to remove support which, if all were approved, could potentially save Somerset Council £6.4m a year.

These are:

• Reducing the level of support for working age applicants. (Part 1)
   
• Introducing a standard non-dependant deduction (Part 2)
    
• Restricting support to Band D Council Tax levels (Part 3)
   
• Restricting the time we can backdate awards of Council Tax Reduction to one month (Part 4)

We explain more about these proposals and what they mean in each section.

Who will this affect?

The proposals would affect working age households in Somerset who receive Council Tax Reduction from 1 April 2025.

The support provided for pensioners will not be affected.

Some other key aspects of the scheme will remain the same:

• If you have capital of more than £6,000 no discount will be awarded. Any capital less than £6,000 will be ignored.
• We will continue to protect War Pensioners by disregarding War Pensions or War Disablement pensions in full.
• We will continue to maintain an Exceptional Hardship scheme which will support people who need additional help, including those who may have their support reduced due to any changes.
• We will continue to disregard the first £30 a week of income where someone in the home is disabled.