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Local Council Tax Reduction Scheme for working age people

Consultation 18 July – 26 September 2025

Durham County Council are proposing changes to the local Council Tax reduction scheme for working age residents. There are no proposals to change the scheme for pension age applicants, and they will continue to receive the same support as usual.

Encouraging participation

DCC are keen to get a good response from those who currently receive this support as well as the wider residents of County Durham. DCC are planning a range of ways to do this and would appreciate your support during the consultation period. They are:

  • Directly contacting those who receive support using what information we hold in terms of email addresses (29,000), telephone numbers to send text alerts to those without email addresses, and finally letters to those where we don’t hold either email addresses or telephone numbers.
  • Press releases and social media campaigns.
  • Text alerts to residents who have signed up with our customer services to be informed of services (20,000).
  • Briefings to advice delivery partners and advice providers via the AiCD Network so that they can encourage people to respond to the consultation. Posters will be available as well as a PDF of the survey which can be printed.
  • Online survey and information on Let’s Talk County Durham
  • Paper surveys in Libraries and Customer Access Points
  • Use of digital screens in libraries and CAPs supported by posters as necessary
  • Information to our networks across all sectors including the VCS via the Consultation Update.
  • Two online consultation information events to be held on 5 and 14 August. To book a place visit Let’s Talk County Durham.

Give us your views

DCC want to understand the views of those on the scheme, Council Tax payers, organisations that support and provide services to our communities, and local businesses on:

  • whether you agree or disagree with us moving to an Income Banded Scheme, and if/how it may affect you/the people you work with, the options for everyone to pay a contribution towards their Council Tax bill and the impact of either a 10%, 20% or 25% minimum contribution
  • the removal of the Second Adult Reduction
  • changes to the Non-Dependant Deductions to a flat rate
  • changes to the amount of savings (capital) you can have to qualify for a Council Tax reduction

How to take part

There are a number of ways people can take part:

If you would like the consultation information in another format, contact letstalkcountydurham@durham.gov.uk.

The deadline for feedback is 26 September 2025.

The proposals and background 

Council Tax Reduction (CTR) is financial help to pay Council Tax for anyone who is on a low income. Since April 2013, DCC have had to create their own Council Tax Reduction Scheme for people of working age.

The scheme right now

Right now, the scheme:

  • helps over 32,000 working age households in County Durham
  • costs £41.3 million annually for Council Tax reductions

Over the past 12 years, DCC have had one of the most generous CTR schemes in the country. Like most councils, they are under huge financial pressures, and must look at everything we offer to find ways to reduce costs. On top of the £270 million in cuts made to our budget since 2011, a further £69.252 million must be saved for the period 2025/26 to 2028/29 to balance the budget.

Changes since the scheme was introduced 

Several things have changed in the last 12 years, including: 

  • Most working age people have been moved onto Universal Credit (UC). Currently 84% of the county’s working age CTR claimants are on UC which is expected to rise to 96% by 2026 (around 30,700 households).
  • There are now more working-age claimants compared to pensioners.
  • The number of pensioners claiming is the lowest in 12 years.
  • After a rise during the Covid-19 pandemic, the number of working age claimants is now at its lowest level since 2013.
  • Even though fewer people are claiming, the cost of the scheme has gone up because Council Tax bills have increased.
  • Administration costs have also gone up due to the work caused by the move to UC. This is because the number of administrative tasks related to CTR that we handle has gone from 169,000 to 191,000 in just two years. This could rise to over 250,000 tasks by 2026.

How the current scheme works 

The current system works out an ‘Appropriate Amount’ of money, based on national benefit rates, for each person or family for their living expenses.

Then, it looks at how much money the household gets each week. This includes wages, benefits from the government (including the Department of Works and Pensions (DWP), and any money that does not count, such as Personal Independence Payments (PIP) (which is called ‘disregarded income’).

If the household’s income is less than their ‘Appropriate Amount’, they get full help with their Council Tax. If their income is more than the amount they need, they do not get full help. Instead, 20% of the extra money they have, is taken off their Council Tax bill.

The amount of help each person gets can be different. It depends on things like how many people live in the home, how much money they make, what Council Tax band their home is in, and if anyone has a disability.

Why DCC are considering changes  

On average, someone on UC gets 11 different Council Tax bills a year, a new bill has to be issued every time their circumstances change. This means that people experience: 

  • frequent changes to their CTR award making it more difficult to budget 
  • problems with direct debits due to the frequency of changes 

For us, this means higher administration costs due to higher printing and postage costs 
more staff time to manage changes due to the increasing number of tasks that we have to do each year.

Below we explain the proposed changes.

Introduction of an income banded system

They are suggesting a new Income banded system that would start on 1 April 2026 for the new Council Tax year.

The changes would only affect working age people. 

There are four options about how a new system could work and DCC are keen to understand your views about these. 

  • Option 1a: Income Banded CTR Scheme 
  • Option 1b: Income Banded CTR Scheme with a minimum of 10% contribution to Council Tax bill  
  • Option 1c: Income Banded CTR Scheme and a minimum of 20% contribution to Council Tax bill  
  • Option 1d: Income Banded CTR Scheme and a minimum of 25% contribution to Council Tax bill

The introduction of a banded scheme and the options would work the same, except options 1b – 1d would mean that all households would have to pay a contribution towards their Council Tax. 

For each option, they would replace the current complicated calculation of the amount of ‘earnings disregard’ for different types of households such as couples, people with disabilities, carers, lone parents etc, with a new standard ‘earnings disregard’ of £10 per week.

Shown below are examples of how this might affect households in the future. The examples are calculated using an average weekly Council Tax charge. The amount may be less or more depending on your Council Tax Band. 

Option 1a: income banded scheme with no contributions 

DCC would ignore:

  • your DWP benefits including Universal Credit (UC)
  • any unearned income in your UC assessment, if you qualify for UC

DCC would count:

  • your and any partner’s earnings (minus the new standard ‘earnings disregard’ of £10 per week)
  • other income like pensions or savings

DCC would then compare your weekly income, for example:

What this would mean for households
  • Small changes in income that will not lead to new bills, as your income is more likely to stay within the income bands, meaning there is no change to the percentage of discount they receive.
  • It would be easier to understand.
  • It also protects larger families from losing support if benefit rules change, by not having the level of support you receive based upon the size of your family.
  • This change would also mean that working age claimants would have to pay between 0% and a maximum of 75% (£25.50 on average) of the Council Tax bill.
What it would mean for DCC

The new scheme would cost the same as the current one but would be easier to understand and manage.

Example for a household, the current scheme:

  • Mr X lives with his partner and two children.
  • He works part-time and earns £180 per week.
  • They get £1,434 per month in Universal Credit.
  • They also get £88 per week in Personal Independence Payment (PIP).
  • Their Council Tax is £30 per week.
  • They currently get £11.79 off their weekly Council Tax and pay £18.21

Under the new scheme:

  • UC and PIP are ignored
  • His earnings are counted as £170 per week (after the £10 is taken off).
  • This puts him in the 50% discount band.
  • So, they get £15 off their weekly Council Tax and pay the remaining £15 themselves.

Option 1b: Income Banded CTR Scheme and a minimum 10% contribution to their Council Tax bill 

This would be the same as the option 1a, but with the following differences.

We compare your weekly income, for example:

What this would mean for households

This change would mean that working age claimants would have to pay a minimum of 10% of their Council Tax bill (£3.40 per week on average) up to a maximum of 75% (£25.50 per week on average).

What this would mean for DCC

This will reduce the cost to run the scheme by approximately £3.8million per year to help us balance the budget.

Option 1c: Income Banded CTR Scheme and a minimum 20% contribution to their Council Tax bill 

This would be the same as the option 1a, but with the following differences.

They would compare your weekly income to this table:

What this would mean to households

This change would mean that working age claimants would have to pay a minimum of 20% of their Council Tax (£6.80 per week on average) up to a maximum of 75% (£25.50 per week on average).

What this would mean to DCC

This will reduce the cost to run the scheme by approximately £7.9 million per year to help us balance the budget.

Option 1d: Income Banded CTR Scheme and a minimum of 25% of the Council Tax bill to pay 

This would be the same as the option 1a, but with the following differences.

We compare your weekly income to this table:

What this would mean for households

This change would mean that working age claimants would have to pay a minimum of 25% of their Council Tax bill (£8.50 per week on average) up to a maximum of 80% (£27.20 per week on average).

What this would mean for DCC

This will reduce the cost to run the scheme by approximately £10.3million per year.

Removal of the Second Adult Reduction (2AR)

If the proposal to move to an income banded system for working age households was agreed, they would also have to remove the 2AR. 

The 2AR is a type of Council Tax support for people who do not qualify for regular CTR because their income or savings are too high, live with another adult (not their partner or a dependent) who has a low income.

This other adult is called a ‘second adult’, and if they were the one responsible for the bill, they may qualify for help.

Depending on the second adult’s income, the bill payer can get a reduction of 7.5%, 15%, or 25% off their Council Tax bill.

The bill payer’s own income or savings don’t affect this discount.

What is being proposed

To create a new fairer and more efficient system that uses income bands, we propose this support is removed as currently, bill payers may have significant income or savings and still qualify for welfare support through Second Adult Reduction.

The new scheme will decide how much help someone gets based on their personal income and circumstances.

  • 380 households in the county currently receive Second Adult Reduction.
  • It costs the council £133,000 a year.
  • If the bill payer has a low income themselves, they can still apply for CTR.
  • More than 70% of other local councils have stopped offering this type of support because it does not take the bill payer’s personal situation into account.  

Changes to non-dependant deductions

A non-dependant is an adult (over 18) who lives with you but is not classed as a dependent child, such as a grown-up child or a friend.

Right now, if you get CTR, the amount you receive can be reduced based on how much money the non-dependant earns. You have to provide proof of their income and tell us if their situation changes. 

Almost 1,000 households have a non-dependant deduction from their CTR.

What is being proposed

A weekly deduction of £10 for each non-dependant, no matter how much they earn.

Currently non-dependant deductions are not made if the non-dependent is a student, or if you or your partner get the daily living part of Personal Independence Payment (PIP) or a similar benefit.

This change would make the system simpler and reduce how often people need to report changes.

The £10 deduction

The current National Living Wage is:

  • £12.21 for people aged 21 and over
    £10 for people aged 18 to 20

So, we believe that £10 deduction is a fair flat rate.

Lowering the ‘savings’ (Capital) allowance

At the moment, if you’re working age and applying for CTR:

  • you cannot have more than £16,000 in savings
  • £1 per week for every £250 over £6,000 (between £6,000 and £15,999) is counted as income
Why change this?

A 2024 UK savings report shows:

  • 1 in 3 adults have less than £1,000 in savings
  • 65% have less than 3 months’ worth of expenses saved
What is being proposed

Lower the savings limit from £16,000 to £6,000.

This would impact 425 households in the county who currently receive LCTR, which is just over 1% of households claiming a Council Tax reduction.