Can I get a council tax reduction on Universal Credit? Our expert explains the rules

Understanding whether you can get a council tax reduction on Universal Credit is particularly important at a time when household budgets are being squeezed from every direction. 

Soaring inflation and rising household bills mean that millions of families have even less disposable income. And those who are on lower incomes and who can claim Universal Credit are likely to feel the pressure on their finances more than others. There are also worries about council tax going up again at the start of the next tax year.

Paul Britton , managing director of Britton and Time solicitors told us: “Although your council tax is fairly similar compared to last year, the rising cost of other bills means that households may be put in a position where they have to choose between going into debt over council tax fees or keeping their heating on. It is important that people explore their options to limit costs.”

It's also worth checking out Martin Lewis' council tax tip to reduce your bill and maybe even get a backdated refund.

Can I get a council tax reduction on Universal Credit? 

Whether you can get a council tax reduction if you get Universal Credit will depend on your local authority and its requirements. Universal Credit and council tax are separate schemes and claiming Universal Credit doesn’t automatically entitle you to council tax support.

Solicitor Paul Britton explains: “The government allows local councils to set the rules within their constituencies. They define the factors you need to meet for a council tax reduction. Therefore, the rules are different all over the country, so it’s important to check the rules in your local area.”

To check if you’re eligible, you’ll need to enter your postcode into the gov.uk council tax reduction directory and it will link you to your local council’s website for more information. You can also check whether you qualify for council tax reduction by using a benefits calculator such as Entitledto.co.uk and Turn2Us.

“Alternatively, you can always pick up the phone and speak to a member of the council tax team from your local area. Once you have explained your circumstances, they can inform you of any reductions or schemes that can assist you,” adds Paul Britton.

How much could my council tax be reduced by?

The level of reduction you could receive will depend on a number of different factors, which is why you’ll need to speak to your local council to discuss your options. 

Shaun Moore, tax and financial planning expert at Quilter, says: “If you are on a low income or claim universal credit, your bill could be reduced by as much as 100% - given the current cost-of-living crisis, this could make a considerable difference to your finances. 

“What you are entitled to will depend on several factors, including where you live, your personal circumstances such as your income and the number of children you have, your household income and whether your children or other adults live with you.”

Generally, you’ll find that the reduction will be either 25%, 50%, 75% or 100%. Here’s an example of how it could work:

Source: Oxford County Council

Remember each council is different, so your local authority could have different income bands and criteria.

Could I qualify for other reductions or discounts?

You don’t only have to be receiving Universal Credit to qualify for a council tax reduction. You could also get a discount if you are or live with a student, if you are severely mentally impaired, or if you are the only adult living in your home. Discounts range from 25% to 100%.

There’s also the disabled band reduction scheme to consider, as MoneyNerd founder Scott Nelson explains: “If you live with a person who is disabled and needs an extra room and extra space for a wheelchair, you may see your property reduced by a band.

“Another one worth mentioning is a second adult rebate. This method will reduce your overall council tax bill. It applies if you live with someone over 18 who isn’t your partner and who isn’t paying rent. If they’re not paying council tax and are on a low income, you could be eligible.”

Even if you have qualified for a reduction, but can't afford to pay your council tax, more help could be available. Solicitor Paul Britton explains: “Many councils offer discretionary shortfall schemes you can apply for if you are still struggling financially after the reduction is granted. These applications are granted on a case-by-case basis so it is worth considering if the reduction will not cover your outgoings.”

How to apply for a reduction

To apply for a council tax reduction, you’ll need to head to your local authority’s website - the gov.uk website can help direct you. You will then need to fill in an online form, providing the relevant information. You’ll usually need to provide details about your financial circumstances which could include payslips, household bills and evidence of benefits received so that your council can approve your application. 

Should you need help at any stage, give your local council a ring or speak to Citizens Advice for free. You should also speak to your local council immediately if you can’t afford to pay your council tax bills as they might be able to come up with a revised repayment plan. Failing to pay your council tax can have serious repercussions so make sure you get help if you need it.