How is tax worked out
This advice applies to England
Advice can vary depending on where you live.
Advice for other parts of the UK
Choose a country
To work out whether you're entitled to Council Tax Reduction (CTR) and how much you’re entitled to, your local authority may need to look at how much weekly income you have.
If you’re a pensioner, the Government has set out rules about how your local authority should work out your entitlement to CTR.
Read this page to find out more about how your income affects your entitlement to CTR, if you’re a pensioner.
What you need to know
If you're a woman, the age you can get Pension Credit is the same as your state pension age.
If you're a man, the age you can get Pension Credit might be different from your state pension age.
The GOV.UK website has an online calculator which tells you when you can get Pension Credit, available at www.gov.uk
Who is a pensioner?
When you claim CTR, you’re considered to be a pensioner if you’ve reached the age when you can get Pension Credit. This doesn’t actually mean you must be getting Pension Credit – just that you’ve reached the age when you are entitled to make a claim.
If you’re not a pensioner, your local authority can make its own rules about who is or is not entitled to CTR and can say how this should be worked out. You will need to check with your local authority to find out what its rules are about who is entitled to CTR.
The rules about how CTR is worked out if you’re a pensioner depend on whether:
- you get Pension Credit
- you get the guarantee part of Pension Credit
- you only get the savings part of Pension Credit without the guarantee part.
If you get the guarantee part of Pension Credit
If you’re a pensioner and either you or your partner get the guarantee part of Pension Credit, you are entitled to a full reduction on your council tax. The local authority will ignore both your income and your capital.
However, if you have a non-dependent adult living in your household, the
amount of CTR you get may be reduced.
If you only get the savings part of Pension Credit
If you only get the savings part of Pension Credit but not the guarantee part, your local authority will use the Pension Service's calculation of your income and capital to work out how much CTR you should get. The local authority doesn't need to do their own calculation. Some adjustments to the figure will be done. These adjustments are similar to those used to calculate Housing Benefit.
How your income is worked out if you don't get pension credit
If neither you or your partner get Pension Credit you can still apply for CTR. The local authority will need to work out your weekly income to see if you are entitled to CTR and, if you are, how much CTR you are entitled to. Your income includes your partner's income but not your children's income.
Income is made up of the following:
- tax credits
- income from capital
- other income
- notional income
- income paid to someone else on your behalf.
The way in which your income is worked out if you don't get Pension Credit is similar to the way in which your Housing Benefit would be calculated if you applied for it.
Once they’ve worked out how much income your household has coming in every week, your local authority will compare this with an amount the Government says you need to live on. This amount is called your applicable amount .
If your income is the same as or less than your applicable amount, you’ll get a full reduction on your council tax.
However, if you have a non-dependent adult living in your household, the amount of CTR you get may be reduced.
If your income is more than your applicable amount, you may be able to get some CTR, but this will depend on your income. If you have too much income coming in, you won’t get CTR. If there is only a small difference between your income and your applicable amount, you may still be able to get some CTR, but it won’t be the full amount.
Next stepsSource: www.citizensadvice.org.uk