Thousands of low-income pensioners at risk of huge council tax bill hikes from September – how new law could stop this
Check if you're affected
THOUSANDS of low-income pensioners are at risk of facing huge council tax bill hikes from September 1.
It comes as two million claimants on legacy benefits are being asked to move benefits under a process known as managed migration.
However, local councils are being encouraged to potentially assist thousands of pensioners who might face higher bills due to these changes.
It comes as the majority of those claiming tax credits who are over the state pension have been sent migration notices which ask them to claim pension credit.
However, not everyone over the state pension age will be asked to do this before their tax credit claims close.
This means they’re forfeiting more generous council tax reductions worth 100% of their bill.
Usually, if you or your partner are getting the guaranteed credit part of , your household might doesn’t have to pay council tax.
However, if you’re currently claiming tax credits as a couple and one member is above and another below the state pension age, you will be asked to claim Universal Credit instead of pension credit from September.
The government has now warned that this shift could result in increased bills for pensioners.
This is because the Council Tax Reduction Schemes Regulations 2012 specifically exclude people who receive (or whose partner receives) Universal Credit from receiving pension age council tax reduction.
Instead, they would have to apply to a locally designed working age scheme, which may provide a smaller reduction.
These include discounts between 25% and 100%, but you’ll need to be on a very low income to get your whole council tax bill waived.
Unfortunately, a new law enabling pensioners on Universal Credit to claim council tax reductions will not take effect until April 2025.
However, in the interim, the government has implemented a rule allowing local councils to provide financial assistance to residents to compensate for the loss of income.
This measure ensures pensioners do not suffer financially, but they must contact their local authority and successfully claim the available funds.
Find your local council’s contact details by visiting www.gov.uk/find-local-council.
COUNCIL TAX REDUCTIONS
IF you're struggling with your council tax costs, it's worth checking out whether you're entitled to reduce your tax bill, which can save you thousands of pounds.
Some people can even get their bills slashed by 100%, meaning they wouldn’t pay anything at all.
Here are all the discounts available.
If you’re a pensioner
If you receive the guaranteed credit part of pension credit, you could get a 100% discount on your council tax.
If not, you could still get help if you have a low income and less than £16,000 in savings.
If you live alone, you will get the 25% reduction, even if you’re not entitled to any benefits.
If you live alone
If you’re the only adult in your home, you can get a 25% discount on your council tax bill.
This includes if you’re a single parent with children under 18 in the house.
Usually, you’ll need to let your local council know to get the reduction.
Even if other adults are in your home, you might still get the 25% reduction, as some groups of people are “disregarded” for council tax purposes.
If you’re a student
Households where everyone is a full-time student do not have to pay any council tax.
To qualify as a full-time student, your course must:
- Last at least one year
- Involve at least 21 hours study per week
If you’re between 18 and 20 and doing A Levels or equivalent, your course must last at least three months and involve at least 12 hours of study a week.
If there is an adult who is not a student in your household, they will need to pay council tax, but should still qualify for a discount if everyone else is a student.
If you have a disability
If you or someone you live with has a disability, you might be able to get a reduction on your council tax bill, or even get a complete exemption so you pay nothing.
The disabled band reduction scheme is designed for people who need to live in a larger property, specifically due to a disability.
For instance, you might need an extra bathroom or kitchen for the disabled person or extra space in the halls to manoeuvre a wheelchair.
If you’re eligible, you’ll pay council tax at the next rung down.
For instance, if you live in a band D home, you’ll pay at the band C level.
If you’re in the lowest band, you get a 17% bill reduction.
Plus, if someone in the household has a severe mental impairment, you should be able to apply for a discount on council tax.
To qualify, you’ll need a certificate proving that the person is severely mentally impaired, such as from a GP.
If you’re severely mentally impaired and live alone, you should get a 100% reduction on your bill.
If you’re on a low income
If you’re on a low income, you might be able to apply to your local council for council tax reduction.
To find out if you’re eligible, check with your local council, as the rules vary depending on where you live.
You’ll need to give information about your income and personal circumstances.
If you receive benefits or have other people living with you, this might impact the level of reduction you receive.
If you qualify, the council will work out your new council tax bill and tell you how much you need to pay and when.
If you receive Universal Credit, income-based jobseeker’s allowance (JSA), income-related employment and support allowance (ESA) or income support, you might be eligible for a discount.
MANAGED MIGRATION PROGRESS
In January, the government announced the number of migration notices it plans to send out in the coming financial year.
Before this date, the focus was sending migration notices to households claiming tax credits-only.
However, 110,000 income support claimants and a further 120,000 claiming tax credits with housing benefit started receiving their letters in April.
Over 100,000 housing benefit-only claimants were contacted in June.
More than 90,000 people claiming employment and support allowance (ESA) along with child tax credits started being asked to switch in July.
Meanwhile, 20,000 claimants on jobseekers allowance (JSA) will be contacted from September.
The Sun previously reported that, in August, thousands claiming tax credits who are over state pension age will be asked to apply for either Universal Credit or pension credit.
However, pensioners claiming tax credit as part of a joint claim, where a spouse is still under the state pension age, will be asked to claim Universal Credit from September instead.
It was initially planned that those claiming income-related ESA alone would not be moved until 2028.
However, the DWP brought forward plans to move these households to Universal Credit by the end of 2025.
From September 2024, 800,000 households will begin to receive letters explaining how to move from ESA to Universal Credit.
HELP CLAIMING UNIVERSAL CREDIT
As well as benefit calculators, anyone moving from tax credits to Universal Credit can find help in a number of ways.
You can visit your local Jobcentre by searching at .
There’s also a free service called Help to Claim from Citizen’s Advice:
- England: 0800 144 8 444
- Scotland: 0800 023 2581
- Wales: 08000 241 220
You can also get help online from advisers at .
Will I be better off on Universal Credit?
AROUND 1.4million people on legacy benefits will be better off after switching to Universal Credit, according to the government.
A further 300,000 would see no change in payments, while around 900,000 will be worse off under Universal Credit.
Of these, around 600,000 are expected to get top-up payments if they move under managed migration, so they don’t lose out on cash immediately.
The majority of those – around 400,000 – are claiming employment support allowance (ESA).
Around 100,000 are on tax credits while fewer than 50,000 each on other legacy benefits are expected to be affected.
Examples of those who may be entitled to less on Universal Credit according to the government include:
- Households getting ESA who and the severe disability premium and enhanced disability premium
- Households with the lower disabled child addition on legacy benefits
- Self-employed households who are subject to the Minimum Income Floor after the 12 month grace period has ended
- In-work households that worked a specific number of hours (e.g. lone parent working 16 hours claiming working tax credits
- Households receiving tax credits with savings of more than £6,000 (and up to £16,000)
But if they don’t switch in the future, they’ll risk missing out on any future increase to benefits and see payments frozen.
Those who move voluntarily and are worse off won’t get these top-up payments and could lose cash.
Those who miss the deadline and later make a claim may also not get this transitional protection either.
The clock starts ticking on the three-month countdown from the date of the first letter, and reminders are sent via post and text message.
There is a one-month grace period after this, during which any claim to Universal Credit is backdated, and transitional protection can still be awarded.