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Re and council tax overpayment of council tax support

LJF
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Benefits caseworker - Manchester Citizens Advice Bureau

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Joined: 12 July 2010

Client has had her house council tax rebanded from band c to b backdated to 2015. She has now got new council tax bills with charges from 2015 due to overpayments of council tax support.

Surely this can’t be right. Can’t get my head around it.

Cheers

andyrichards
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City services - Brighton and Hove City Council

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If she actually had to pay some council tax before the rebanding then she will have paid too much and be due a refund.  This would neatly offset the excess CTR….I would have thought..?

Elliot Kent
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Shelter

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Let’s say Band B is £1000 per annum, Band C is £1200 and CTS pays 75% of the bill. All figures plucked out of the air.

Previously, the client was liable for £1200, 75% of which - i.e. £900 - was being met by CTS and she was paying £300.

But when recalculated using the new figure of £1000, the CTS should only be £750 and your client need only pay £250.

This means that in the re-calculated period £150 too much has been paid in CTS and your client has been paying £50 too much. Reduced down, that creates a CTS “overpayment” of £100 per annum.

(Substitute your own figures for the years in question - provided that at least 50% of the bill is being met by CTS, you will end up with an “overpayment”).

This is presumably how the council has reached this result. I don’t know enough about council tax to tell you if that is the right or wrong way to approach it.

Timothy Seaside
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Housing Services, Arun District Council

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As Andy says, any overpayment of CTR will have been cancelled out by the reduction in CT liability (unless the claimant was actually receiving a higher rate of reduction than they were entitled to).

Using Elliott’s figures, I would explain it like this:-
CT Demand is a debit of £1200. A credit of £900 CTR, and a credit of £300 cash settles the bill so the balance is zero.
When the CT is rebanded, it is a credit of £200 so the balance is now £200 in credit (i.e. the resident is owed money). But the recalculation of the CTR means that only £750 should have been paid - so this is a debit of £150 (i.e. £900 paid, minus £750 recalculated). The balance is now only £50 credit.

On paper (from the point of view of the LA) this would look something like:-
CT Demand: £1200
CTR:          £900-
Cash:          £300-
CT Reband:    £200-
CTR OP:      £150
__________________
Balance:        £50-

CTR isn’t necessarily calculated as a percentage of CT, but it can never be more than CT, so I can’t see how a reduction in liability on its own could result in an increase in the debt. For this to happen, the reduction in CTR would have to be more than the reduction in CT.