New scheme for Council Tax Support proposed

The council tax support scheme helps people on low incomes by reducing the amount of Council Tax they have to pay.

The current scheme in Reading has been in place for 13 years and no longer works as well as it should. Many working-age residents on low incomes have moved onto Universal Credit. Because Universal Credit payments can go up and down, the level of Council Tax Support changes too. This means residents can receive lots of updated bills, making it harder to understand what they owe and plan their household budget.

The council is proposing a new scheme based on household income bands. If approved, it would start in April 2027.

One of the biggest changes is that people receiving Universal Credit would no longer need to apply for Council Tax Support. Instead, any reduction they are entitled to would be given automatically. This would make the process quicker and easier for residents.

The new scheme would also mean fewer revised Council Tax bills need to be sent out. This would save staff time and allow them to focus on helping the residents who need the most support. Changes to the rules on backdating claims could also help reduce debt for some residents.

The council expects that most people who currently receive Council Tax Support would get the same level of help under the new scheme. A smaller number of residents would either receive more support or less support than they do now.

If anyone is likely to be worse off under the new scheme, the council would contact them directly. They would be offered advice and support to help them maximise their income and manage any debt. They may also be able to get extra help through the Council's Crisis and Resilience Fund.

More than 40% of councils across the country already use similar income banded schemes. In Berkshire, councils including Wokingham, Bracknell Forest and Slough have already made this change.

A public consultation on the proposals is due to begin later this month, giving residents the chance to share their views before any final decision is made.

Councillor Ruth McEwan, Lead for Corporate Services and Resources, said:

“The proposed change to a much simpler, quicker and easier to understand council tax support scheme will remove the need for residents to spend time filling in forms if they are on universal credit, as the reduction would be automatically awarded. It also negates the need for the Council to regularly post out updated bills to residents as their income levels change, which is not only costly but is understandably confusing for residents and makes it difficult for them to plan their finances.

“Councils across the country are increasingly moving to a banded scheme based on household income and there are significant benefits to residents and the Council in making the switch.

“If agreed at Policy Committee, and when the consultation begins, we are keen to hear views from as many residents as possible, particularly people who benefit from the local council tax support scheme now, as their views will be taken into account before any final decisions are made on an updated scheme for next year.”

The proposals will be discussed at a meeting of the Council’s Policy Committee on Wednesday 16 September.

If agreed, public consultation will begin the following day (17 Sep) and run until 19 November. That will include contacting a representative sample of council taxpayers, including those impacted by the proposed scheme changes. An online questionnaire will be available from 17 September. A listening and engagement session is also planned with key stakeholders to discuss the proposal.