Council Tax Reduction in Scotland: 2022-2023

1. Introduction

The CTR scheme provides lower income households with a reduction in their Council Tax liability. The reduction can be any proportion of the liability, up to and including 100 per cent (i.e. the household has their Council Tax liability reduced to zero and pays no Council Tax).

CTR data is reported monthly from CTR extracts provided by local authorities on a monthly basis. This publication provides the data on the number of CTR recipients and the weekly income forgone from April 2022 to March 2023. It also makes references to the previously published March 2022 statistics. The publication also includes detailed analysis of additional characteristics and weekly awards for March 2023 CTR data and therefore supplements the monthly release for the data period up to March 2023 published on 16 May 2023.

Since introduction, entitlement to CTR in Scotland has broadly replicated, as far as possible, previous entitlement to Council Tax Benefit (the previous UK-wide benefit abolished in 2013).

The 2017-18 and 2018-19 Local Government Finance settlements included agreement between the Scottish Government and local government for locally determined Council Tax increases to be capped at 3 per cent in cash terms. In 2019-20 and 2020-21 they were capped at 3 per cent in real terms, which was 4.79 per cent (in 2019-20) and 4.84 per cent (in 2020-21) in cash terms. In 2021-22, Council Tax rates were frozen. In 2022-23, 21 local authorities increased their CT rates by 3 per cent. There were eight local authorities who increased their CT rate by less than 3 per cent. Aside from Shetland, who froze their rate at 2021-22 levels, the smallest increase was Inverclyde who increased their rate by 1.95 per cent. East Renfrewshire and Falkirk increased their rates by the largest amounts – 3.5 per cent and 4 per cent respectively.

1.1 How CTR awards are calculated

Entitlement to CTR and the amount awarded is based on the characteristics and income of the applicant and their household. Figure 1 shows the process an application goes through to calculate whether CTR is awarded. Please note that this is a simplified version and does not include some additional features of the scheme (such as capital rules, non-dependant deductions and the second adult rebate). Figure 2 provides an illustration of a CTR calculation in 2022-23.

Figure 2: Illustration of CTR Calculation 2022-23

A single parent, with two children aged 12 and 14, who lives in a Band C property in Edinburgh.

The Band C Council Tax liability was £17.63 after single person discount of 25%.

Household weekly income consisted of:

Net Earnings of £192.00
Working Tax Credit of £55.33
Child Tax Credits £112.88

Income

Net Earnings £192.00
Working Tax Credit £55.33
Child Tax Credits £112.88
Total Income £360.21
Earnings Disregard (Lone Parent) - £25.00
Earning Disregard (Tax Credit) - £17.10
Total Income for CTR £318.11

Calculation of household’s CTR award

The applicable amount is calculated. This household would receive the single personal allowance and two child personal allowance.

Single Personal Allowance £77.00
Two Child Personal Allowance £177.00
Applicable Amount £254.00

This household’s excess income is then £64.11 (£318.11 - £254.00).

As the total income is greater than the applicable amount, partial CTR is awarded and the household is expected to contribute 20% of their excess income towards their Council Tax liability. So the Weekly Household Contribution is £12.82 (20% of £64.11).

The weekly CTR is £4.81 (£17.63 - £12.82) and their council tax liability (i.e. the amount of council tax they need to pay) is £12.82.