Does Council Tax Reduce When You Retire?
According to statistics analysed in Later Life in the United Kingdom 2019 there are nearly 12 million people in the UK who are aged 65 years and above. Out of these, 5.4 million people are above the age of 75 years. It is expected that with rising life expectancies and a growing ageing population, there will be an additional 8.5 million people added to the above 65 years demographic.
To consider a more relative aspect of this data, the same report suggests that nearly 6.5 million (one-third of the total population) households in the UK are headed by someone who is above 65 years of age. This figure is estimated to increase by 54 per cent by 2041; bringing this to a total of 10 million households. For perspective, this would be the total population of London.
Now that we have a clear idea of the magnanimity of the segment being referred to in terms of demographics, one can estimate the amount of council tax revenues generated through the contribution of this segment of the population. Should council tax be discounted taking into consideration whether an individual is employed or retired, it would mean a large chunk of council tax revenues being missed by local authorities.
Does Council Tax Reduce When You Retire?
No, council tax does not reduce simply because someone has retired. However, should low income count as a factor resulting from retirement, individuals may claim for a council tax reduction.
Similarly, if someone is claiming Pension Credit, living alone, or has less than £16,000 they will qualify for a council tax reduction on their monthly bill.
Based on the current London Living Wage of £10.85 per hour, individuals earning between £86.80 and £173.59 will be considered on a relatively low income and be considered eligible for a 50 per cent discount on their council tax bill. Meanwhile, individuals earning less than £86.80 per week will be considered as earning a low income and will therefore become eligible for a 100 per cent council tax reduction.
To Apply for Council Tax Reduction you should contact your local council office.
To delve deeper into different aspects of this topic, we will assess it based on the following criteria:
- Can Pension Credit Help Me When I Retire?
- How Does Low Income Qualify Me For A Council Tax Reduction?
- How Else Can I Get Council Tax Reduction On My Bill?
- Who Has To Pay Council Tax?
- How Is Council Tax Calculated?
- Who Is Exempt From Council Tax?
Can Pension Credit Help Me When I Retire?
Pension Credit is a state benefit for individuals above state pension age; which aims to help them with finances if they are struggling to make ends meet.
It comes in two parts; Guarantee Credit helps to top up weekly incomes to meet the minimum level and Savings Credit, which is extra money that is given to those whose income is higher than the state pension or they have some savings.
If someone qualifies for Pension Credit, they may not only benefit from added income to meet their living costs but also find themselves eligible for other state benefits as well. These include the following:
- Council Tax
- Dental treatment at NHS
- Cold weather treatment
- Housing benefit
- Carer addition
To know if you qualify for Guarantee Credit, Check your State Pension age
How Does Low Income Qualify Me For A Council Tax Reduction?
Although council tax is a means-tested tax, it is primarily based on the market value of one’s property and the property band assigned to it by the Valuation Office Agency. So, it’s a combination of property and personal tax for homeowners and tenants living in England, Scotland and Wales.
While being on low income does increase one’s eligibility to apply for council tax reduction (and perhaps adds to the chances of the application being approved by the local council), it is not a stand-alone criterion upon which the decision for council tax reduction is based.
You may be low on income but if you jointly hold capital with someone, you will be considered as half owner of it. For instance, if someone has joint ownership of an asset or they share joint savings account with someone (other than their partner), they will be considered as half owner of the total amount of saving in that account.
However, in case you share a joint saving account with your partner, you will be considered as co-owner of their savings as well. This means that their savings in a joint account with you will be considered as your savings.
If the claimant is on low income with little or no savings, they may be eligible for a 100 per cent discount on their council tax bill. This means that until their circumstances change, they will be completely exempted from paying council tax.
Additionally, the following factors will also be considered by local councils as they review a council tax reduction application:
- The area where the applicant resides-each council has their own council tax reduction scheme. Depending on the area in which the applicant resides, the rates and requirements for council tax reduction may be different.
- Their circumstances-in addition to the applicant’s income the local council will also take into consideration, the income of the applicant’s partner (if they live with one), number of children (if any), any benefits that they may be receiving and their residency status.
- Their combined household income-this includes the applicant’s partner’s income (in addition to their own), any joint savings that they have, a pension that either of them might be receiving
- Their household demographics-the number of adults living in the house (in addition to the applicant and their partner) as well as the number of children in the household.
How Else Can I Get Council Tax Reduction On My Bill?
Basic criteria for council tax reduction is based upon an individual’s age, residential status, and income level. To be eligible for a reduction on ones’ council tax bill, the claimant must either be on low income or claim benefits through a government-supported program.
The amount of council tax reduction that they qualify for will depend on the following factors:
- The area in which they live as each local council has its scheme
- Claimant’s circumstances; including their income, number of children, any other benefits that may be receiving
- Total household income; this includes the joint incomes and saving of couples
- If children are living in the house
- Number of other adults in the house
It must be noted here that since the rates of council tax bills are dependant upon local council schemes, they may vary from council to council. Furthermore, the eligibility for council tax benefit and the amount of benefit that may be extended to applicants is also at the discretion of local council schemes.
To apply at your local council office, click here Apply for Council Tax Reduction – GOV.UK (www.gov.uk)
Who Has To Pay Council Tax?
Council tax bills are sent in the name of the person who is registered as the one ”liable” for such bills. This means that even if someone is living with their parents they are not responsible for making council tax payments if they are not considered to be liable for them by the local council office.
Council tax becomes payable upon those who fall under the hierarchy of liability; which looks something like this:
- at the top of the hierarchy is the resident who owns either the leasehold or freehold of the property;
- the second in line is a resident tenant;
- this is followed by a resident who is not a tenant but lives on the property;
- then comes any resident occupying the property;
- and finally, the owner of the property while it remains unoccupied
However, unless the council tax bill is sent to your name, you are not liable to pay.
How Is Council Tax Calculated?
The amount that a resident must pay as council tax may vary across different local councils as they follow individual schemes. However, all of them consider the following factors while assigning an amount:
- The CTR Scheme being at is followed by the local council. This determines the overall rate of council tax to be paid by residents.
- The band is assigned to residents’ property through a valuation expert. Currently, there are 8 bands spread across A – H; where band A is assigned the lowest value and band H is assigned the highest rate. To check your council tax band, click on this link Check your Council Tax band – GOV.UK (www.gov.uk)
Who Is Exempt From Council Tax?
Should someone fall under any of the below categories, they will be considered as exempted from having to pay their council tax bills:
- the resident lives in a care home and not their own home
- the resident is under hospital care
- the resident is living somewhere else; providing care to another person
- the resident is in the armed forces
- the resident is in prison (not for non-payment of council tax bills)
- all the residents are full-time students
- all the residents are under 18 years of age
- all the residents are mentally impaired
Then there may be situations that are property-centric; making the premises ineligible for council tax to be applied. These may include:
- the property is used for charity work
- it is an annexe to the main property
- the property is repossessed
- it has been purchased to be demolished
The following link may be helpful to get more information on council tax exemption: Properties exempt from council tax – Council tax discounts, reductions and exemptions – Newham Council
Council tax reduction may not be directly related to retirement age, however, it does have a cause and effect relationship when it comes to residents on a low income or claiming benefits as a result of retirement.
It should also be kept in mind that different individuals will be eligible for a different amount of state pension. Therefore, depending on their living costs, personal circumstances and sources of other incomes, some individuals may qualify for a council tax reduction after retirement, while others may not.
FAQs: Does Council Tax Reduce When You Retire?
What benefits can you claim when retired?
After retirement, you are eligible for Pension Credit, reduced heating costs. health benefits. travel and TV discounts. benefits for war widows or widowers.
What benefits qualify for council tax reduction?
You may receive a 100 per cent discount on your council tax bills if you are receiving a disability premium or disabled child premium, employment support allowance, carer’s premium
a war disablement pension, war widows pension or war widower’s pension.
Will I get Housing Benefit when I retire?
Housing Benefit applies to those individuals who are unable to pay their house rent due to disability, living on benefits, low income or unemployment. However, if you’ve reached the state pension age, you may also apply for it.
What is the maximum Housing Benefit for a pensioner?
If you are a pensioner on a low income, you may qualify for 100 per cent of the eligible rent while on Housing Benefit.
How can I reduce my council tax?
You can reduce your council tax instalments by asking the local office to divide your bill into 12 instalments rather than the usual 10. For more discounts, you can confirm your eligibility. For instance, if you live alone, you will get a 25 per cent discount on council tax; other situations include being low on income or claiming benefits. If all the residents of a household are full-time students, they get a 100 per cent reduction on their council tax bill.