A pending upheaval in the way council tax is administered may mean increased payments for families on low incomes.
Changes that come into effect from April 2013 will reduce the amount of government funding for council tax benefit by 10%. At the same time responsibility for this benefit will transfer from central government to local councils, meaning that there could be as many benefit systems as there are local councils.
To add a further complication for local councils they have been instructed by government that no changes to pensioner’s benefit will be allowed.
Local councils will now have to decide between raising council tax for all those of working age, or reduce the benefit levels for those on low incomes. Currently some low income residents can claim 100% relief from council tax but this could typically be reduced to 75% – 80% under these proposed changes.
The proposed changes to council tax benefit funding will create a complicated system, part directed by central government and part by local councils. This will fly in the face of the coalition aim of simplifying the benefit system.
We could also see workers on low incomes moving from one council area to a neighbouring one to obtain improved benefits.