Government issues further guidance to local authorities on implementing the £500 million COVID-19 council tax hardship fund

MHCLG Council Tax information letter clarifies that hardship fund discount should not be applied on a pro-rata basis, and it may be subject to reassessment if council tax liability subsequently reduces below amount awarded

The government has issued further guidance to local authorities on implementing the £500 million coronavirus (COVID-19) council tax hardship fund that was announced in the Chancellor's 2020 Budget Speech.

In Council Tax Information Letter 3/2020, the Ministry of Housing, Communities and Local Government (MHCLG) sets out a series of question and answers in relation to how local authorities should administer the hardship fund in line with guidance published on 24 March 2020.

In addition to reaffirming the government’s expectation that all working-age local council tax support (LCTS) claimants in 2020/2021 (who are entitled to working-age LCTS in respect of any part of their council tax liability) will receive a further discount of up to £150, MHCLG clarifies that -

• working-age LCTS claimants whose liability for the remainder of the 2020/2021 financial year is less than £150 should only be awarded a discount that brings their liability down to nil;
• the hardship fund discount should be applied at the point a claimant first becomes entitled to working-age LCTS and should not be applied on a pro-rata basis, or be subject to recovery if LCTS entitlement subsequently ends part-way through the year;
• if liability increases and an individual had not previously received a full hardship fund discount because their former liability was less than £150, they should be awarded a further reduction to take their total hardship fund discount to £150, even if their LCTS eligibility has ended;
• if liability decreases mid-year (as a result of increased eligibility for LCTS or discounts and exemptions), councils may need to reassess the level of hardship fund discount, as the level of discount cannot exceed the total liability; and
• any funds remaining after all working-age LCTS claimants in 2020/2021 have received their discount can be used 'as local authorities see fit', including to fund local welfare schemes.

Council Tax information letter 3/2020 is available from gov.uk