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Council Tax Reduction - How it works

Calculating Entitlement to a Council Tax Reduction

CTR works by comparing the amount of income a person has with the amount that a person needs to live on (their 'applicable amount').  If their income is less than the applicable amount, they may be entitled to a reduction of 100%. 

If their income is above the applicable amount, entitlement to CTR is reduced by 20p for every £1 of income above the applicable amount.

There are three key elements needed to calculate how much Council Tax Reduction an applicant may be entitled to:

  • Their total Council Tax due (net of the contributions others in the household might be expected to make – so called “non-dependant deductions”); 
  • Their income and capital; and 
  • Their ‘applicable amount’, which is the sum representing the needs of the applicant and their family (which varies depending on whether the applicant is single or lives with dependents, whether they have children, a disability, caring commitments, etc).

Or, to show it in diagram form: 

Weekly eligible Council Tax

Minus

Allowance/deduction for others in the household who should contribute towards that tax liability or “non-dependant deduction”

Minus

20% of [(income) minus (living expenses or “applicable amount”)]

Equals

Weekly entitlement to Council Tax Reduction.

Further information is available in Frequently Asked Questions.