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UC and Council Tax Support
My client receives UC, including housing costs and a carer element (no wages income). Her max’ UC is then reduced by the Bereavement Allowance that she is receiving.
She has been told that she doesn’t qualify for Council Tax Support - so that got me thinking about how her UC and Bereavement Allowance would have been treated in that calculation? Her Bereavement Allowance income is only slightly above what she would be getting from an IS/CA combination, and the UC that she receives is comparable to the HB that she would have received under the old system - so I’m a little surprised she has been turned down for CTS…
Any comments/suggestions gratefully received.
Council Tax Reduction rules, in the default scheme, take the Universal Credit needs assessment and use the Universal Credit income figures - plus the Universal Credit paid,- as the basis for calculation. This can generate very different results.
Yes, surprising - quite possibly an error.
Which LA is it? Almost every LA has adopted something close to the default CTR scheme approach for UC claimants : the CTR applicable amount is the UC max amount (ie in this case the standard allowance+carer element+housing element); and the income for CTR is the income for UC ( ie the BA ) plus the UC itself.
(Both figures are converted from monthly back to weekly for CTR x12/52) On that basis, she’d normally qualify for the local maximum amount of CTR (or very close to it) .
Her housing element is £467.81 per month (after a bedroom tax deduction). Her weekly UC applicable amount is £216. Her income from BA and UC is £215.50. So she gets full CTR, right?
If the claimant’s income was above the applicable amount, I’d just have to deduct the applicable amount and multiply the excess by 20% to work out the claimant’s contribution to CT?
Her housing element is £467.81 per month (after a bedroom tax deduction). Her weekly UC applicable amount is £216. Her income from BA and UC is £215.50. So she gets full CTR, right?
If the claimant’s income was above the applicable amount, I’d just have to deduct the applicable amount and multiply the excess by 20% to work out the claimant’s contribution to CT?
Typically, yes and yes. Would need to know the LA to be sure - they might have done something unusual.
Sorry, I forgot to say the LA - it’s Sutton.
OK - so probably a £3.75 flat rate deduction and if there were any excess income the taper would be at 25% not 20%.
(See details at https://www.sutton.gov.uk/info/200468/housing_benefit_and_council_tax/1236/council_tax_reduction for other restrictions - including band D cap , £10K capital limit.)
Their treatment of UC does look quite standard, however. (See https://www.sutton.gov.uk/downloads/file/1113/detailed_guide - paras 46 and 52.)
This highlights quite a surprising feature of a conventional default scheme approach to CTR for UC claimants: if the claimant has no earned income and qualifies for at least some UC s/he will always - always - be entitled to whatever maximum CTR the Council allows, whether that’s 100% or something else.
But ... how many sources of income other than earnings are there of which we can say the following:
- it is high enough that the claimant would not qualify for max CTR under a conventional legacy assessment, and
- it still exists under UC (so that rules out tax credits)
Not that many actually, so this will not lead to huge CTR windfalls for claimants who don’t work.
PS there is at least one local authority that has a hybrid scheme: they use the UC award as income plus the claimant’s other income, but they use a conventional CTR applicable amount. This makes it pretty well impossible for anyone with housing costs included in their UC award to get any CTR at all. I am not sure that was exactly what they had in mind, I gather the scheme was drafted by a consultant, hope he has professional indemnity cover!
But it isn’t Sutton so this claimant ought to get Sutton’s full CTR and you don;t even need to do the sums because the rule of thumb holds good every time: no earnings + at least some UC = max CTR. Never fails (Big embarrassing reverse ferret for me if I have got that wrong, but I don;t think I have).
[ Edited: 3 Nov 2015 at 03:21 pm by HB Anorak ]Thanks for all your replies. Still trying to get my head around all this stuff, but hopefully it’ll get better as more and more UC cases arise!
We get full UC next month. I am running calcs on a scenario for someone earning ca £180pw, and it falls out that they should get more UC than they are currently get in HB. This is not unexpected, but I was surprised to see that they will also get more CTR as well. In the current circs they are not entitled to any CTR, but if they exchanged HB for UC (which is itself an increase), it then becomes worth them claiming CTR on top.
I can come up with similar scenarios with WTC in place of HB throughout.
This is all just due to the UC maximum amount being used (CTR reg 28). Have I got this right? Is it intentional?
Maybe this is widely known, but I hadn’t previously realised that a potential benefit of claiming even a small UC award could be to also bring CTR into play.
edit: and vice-versa. A part-time worker who doesn’t think the hassle of UC is worth the money might not realise that their CTR could also drop if they chose to stop claiming UC.
[ Edited: 21 Sep 2016 at 01:54 pm by Jon (CANY) ]It is to be expected that some people will be better off on UC. In some cases the gains they make by switching to UC from the legacy benefits it replaces are slightly offset by a reduction in CTR, but in other cases the gains are magnified.
I often use the example of a couple with two children, renting, with earnings of £20,000 a year before tax, roughly £320 after tax with conventional tax and NI. They gain just under £40 a week from UC before CTR is factored in. If CTR is calculated by the off-the-shelf default method, the UC gain is reined back a little bit - just a couple of pounds a week, but they are still better off by over £30. But if the CTR scheme is one of the many that modifies the income by deducting regular CTR income disregards they gain even more.
And as discussed earlier in this thread, it remains the case in almost every CTR scheme that a claimant on UC with no earnings will always receive the maximum CTR allowable under the Council’s scheme - not always their full council tax, but the most that anyone could get under that scheme.
It is to be expected that some people will be better off on UC. In some cases the gains they make by switching to UC from the legacy benefits it replaces are slightly offset by a reduction in CTR, but in other cases the gains are magnified.
That’s right - back in 2014 I did some examples to show that you can’t predict the change in CTR from the relative gain/loss on transition from legacy to UC - obviously those calcs are now very out of date because of the changes to work allowances and childcare element (and uprating, tax/ni) - but I would guess that similar cases could still be constructed now.
First - three cases where UC is higher, the same, or lower* than legacy benefits but the CTR falls in each case.
Example 1: Single claimant, 25, no children, works 10 hr/week at 6.50/hour ( UC is £34.62 higher than former JSA+HB) but CTR falls by £7.88)
https://www.lgbp3.co.uk/ctr_uc/example_1.pdf
Example 2: Lone parent, 42, three children, works 40 hrs/week at 7.50/hour zero childcare costs (UC is very similar to former WTC+CTC+HB but CTR falls by £2.68)
https://www.lgbp3.co.uk/ctr_uc/example_2.pdf
Example 3: As example two but with 100/pw childcare costs (UC would be around £19 less* than former WTC+CTC+HB and CTR also falls by £8.72)
https://www.lgbp3.co.uk/ctr_uc/example_3.pdf
Conversely, here are three cases where UC is higher, the same or lower than legacy benefits but CTR rises in each case.
Example 4: Single claimant, 25, no children, works 40 hr/week at 6.50/hour ( UC is £27.84 higher than former HB and CTR also rises by £8.13)
https://www.lgbp3.co.uk/ctr_uc/example_4.pdf
Example 5 : Single claimant, 60, no children, lives with one non-dep couple (both on JSA(IB)) and one non-dep who earns 200/wk gross, currently under-occupying by one bedroom, claimant works 25 hrs/week at 7/hour (UC is very similar to former WTC but CTR rises by £6.83)
https://www.lgbp3.co.uk/ctr_uc/example_5.pdf
Example 6 : As example five but without the single non-dep (now under-occupying by two bedrooms ) and claimant is working 30 hrs/week at 7/hour. (UC would be about £14.38 less* than former WTC but CTR rises by £7.16)
https://www.lgbp3.co.uk/ctr_uc/example_6.pdf
* Note for examples 3 and 6, if the claimant qualified for a UC transitional addition to mitigate loss on migration then CTR would still fall by the same amount as the TA would appear equally as both part of the app amount and as income for CTR ( that is if UCTA works as expected as an addition to UC max amount - of course, there are currently no regs for UCTA [that’s still true in 2016!]).
... But if the CTR scheme is one of the many that modifies the income by deducting regular CTR income disregards they gain even more…
Interestingly, I’ve come across one LA with a typical ACS scheme who are applying the standard scheduled disregards (local schedule 3 and 4 via paras 15A.2(b)-(c) ) but who are also applying childcare disregard via local 17/18). Could that be right? - I’d been reading local 15A (the ACS equivalent of Default Scheme para 37) as a complete description of how you assess income for claimants on UC.
The standard ACS drafting doesn’t ringfence income rules for those on and not on UC quite as clearly as it maybe could have done does it, but to me it makes sense to read 15A as a complete self-contained income method for UC claimants so that the DWP’s “raw” income is modified only to the extent specified in 15A. The important thing is to balance both sides of the calculation: a housing element in the applicable amount is balanced by a corresponding increase on the income side, likewise child care charges. If you disregard the childcare charges it upsets the balance and results in a hugely anomalous windfall.
Thanks for these replies. I am much looking forward to this simplified benefit regime.
So if a claimant is paid 4 weekly, in the MAP that they get 2 wages CTS will use this higher income to calculate CTS for that 4 weeks? How will the LA know when this occurs? Does claimant have to inform LA? Assuming LA are using most common scheme and .....
Yes, assuming a conventional scheme a one-off change to monthly UC results in a one-off change to CTR. On the income side, the wages will be double the normal amount and the UC award will be reduced by 63% of the second wage payment. This means CTR will be reduced by (typically) 20% of 37% of the second wage for one month only. Weekly wage cycles, variable overtime, zero-hours contracts ... in an extreme case you could get 12 council tax bills a year and never have to start paying instalments.
As full service UC rolls, out meaning more cases like that, councils are starting to introduce CTR scheme features that smooth out CTR over longer periods. From 2018/19 we will schemes with fixed term awards, but flexibility to respond to major changes of circs (kind of like an AIP).
As for the how the LA will know, as long as the claimant has told DWP they are claiming CTR the DWP will send monthly calculation statements to the LA.
Brilliant. Thanks HB Anorak!