December 2012 Council Tax Default Schemes

New regulations have been issued in relation to default council tax support schemes for local authorites who have not made their own scheme by 31 January 2013.

Under the default scheme, those with income of less than an 'applicable amount' will have a 100 per cent reduction in maximum council tax liability, whilst, for those with income greater than the applicable amount, 20 per cent of the value of the excess income (above the applicable amount) will be deducted from maximum council tax liability to give the council tax reduction.
Deductions will also be made equivalent to the contribution expected to be made by non-dependants in a household.

New localised council tax support schemes, replacing council tax benefit, are to come into effect on 1 April 2013 – see our earlier article in September for further details.  Some of the schemes developed by local authorities are more stringent than the default scheme – especially when it comes to the maximum amount of benefit payable.  For example, in some London boroughs, working age claimants, no matter how little they earn or what benefits they are on will be expected to pay at least 10% (and in some cases, 20%) of the total council tax charge.  While local councils may believe this will raise extra revenue, I think this is an overly-simplistic view, with defaults likely to increase and the cost of collection to rise significantly as a result.

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