Council Tax reduction for working age customers

If you are entitled to Income Support, Income Related Employment and Support Allowance or Income Based Job Seekers Allowance, you should receive the maximum Council Tax Reduction available which is limited to 84% of the Council Tax payable, less any deductions for non-dependant adults who live with you.

If you are working or receive any other type of benefit, or Tax Credits, the amount of “Council Tax Reduction” you get, will be based on all income and capital that of you and your partner have.  We compare your total weekly income with a figure, set by the government, based on your individual or family needs, This figure is known as your “Applicable Amount”.

If you are on Universal Credit, to calculate the amount of any Council Tax Reduction you are entitled to, we use the same amounts that the Department for Work and Pensions to work out your Universal Credit .

If your assessed income is less than or the same as your “applicable amount” you will receive the maximum Council Tax Reduction available which is 84% of the Council Tax payable, less any deductions for non-dependant adults who live with you.

If your assessed income is more than your “applicable amount”, then the amount of Council Tax Reduction, you receive, will be reduced by 20p for each £1.00 that your income is over your “applicable amount” and by any deductions for non-dependant adults who live with you.

We take a total of all income for you and your partner from all sources, including state benefits, pensions, Tax Credits and earnings.

If you are working, we disregard Tax, National Insurance contributions and half of anything paid into a pension scheme.  We also ignore between £5 and £42.10 per week from your earnings, depending on your circumstances.

If you work and pay childcare costs to a registered childminder or nursery, we may be able to deduct some or all of your childcare costs from your earnings.

If you are a Universal Credit customer, the income used to work out your entitlement to Council Tax reduction, will be the same amounts used by the Department for Work and Pensions to work out your Universal Credit entitlement.

Certain types of income are not counted at all as income, such as Attendance Allowance, Personal Independence Payment, Disability Living Allowance, Child Maintenance received, Child Benefit, Bereavement Support Payment and certain War Pensions.

All self-employed people are eligible to make a claim for Council Tax Reduction, no matter what the nature of the business. This includes people who are sole traders, those who jointly run a business, those who run a business which also employs others, child minders, taxi drivers and anyone who may be a director of a company. This list is not exhaustive.

 
What evidence of earnings do I need to provide?

When looking at the income of the business we will ask you to provide your last thirteen weeks income and expenses figures, this will enable us to see how your business is trading in the current economic situation. We will ask you to complete a self-employed income and expenditure form, which should be completed with your last 13 weeks details, you should also provide receipts for business expenses. You will also be asked to provide a copy of your most recent year end accounts, i.e. profit and loss and balance sheets. This will enable us to compare how your business traded in your last full year, to the current thirteen weeks details that you will provide.
 
With regards to taxi drivers, we have a separate taxi driver income and expenditure form for completion, as the information we require from taxi drivers differs from that of other self-employed.
 
If you are only just starting out in business and are unable to supply any records, we will still ask you to complete the self-employed income and expenditure form for the period of time that you have been trading and request that you provide an estimate of your income and expenditure for a forthcoming period of time. The estimated period of time will usually start from the date you are completing the self-employed income and expenditure form and the forthcoming thirteen weeks.
 
If you visit either Sefton One Stop Shop for help in completing the self-employed income and expenditure form you will need to bring along any weekly record book you keep, showing your income from the business and any expenses you have incurred. You should also provide receipts for expenses, i.e. receipts for petrol/diesel, goods purchased, utility bills paid, insurance premiums, telephone bill's, rent paid on business premises and any other relevant business expenses.

What is my income for benefit purposes?

Once we have received all the details of your income and expenses we will then calculate an assumed weekly income from your business on which to calculate your benefit claim. This will be reviewed periodically by us and you can also ask for your income to be reviewed at any time.
 
The income we will include will be all monies coming in to the business, but may not include certain sums of capital paid in to the business during the period being looked at.
 
We will then take off any allowable expenses that are wholly and exclusively incurred by the business. Examples of allowable expenses are listed below:

• Rent paid on business premises.
• Purchases of stocks and supplies.
• Advertising, postage and stationery.
• Fuel and other vehicle running costs.
• Telephone.
• Wages paid for staff employed by the business.

The list is not exhaustive. In looking at the expenses of the business there are certain expenses that we do not allow, which the Inland Revenue do, such as depreciation.
 

How is self-employed income worked out?

Total income minus any allowable business expenses = Pre-Tax Profit
 
Pre-tax profit minus notional income tax, notional National Insurance contributions and half of any pension contributions = Net Profit
 
We will calculate your notional income tax and National Insurance deductions ourselves based on your net profit figure. These figures may differ from the figures worked out by the Inland Revenue.

Self-employed child minders

Child minders are treated differently. We simply use a third of your gross weekly takings to calculate your income. We do not take any expenses into account.
 

Where can I get help to complete my form?

We understand that this may be the first time that you have applied for benefit and the information that we request may seem daunting, but we would ask that you do not let this put you off making a claim for benefit. You can either visit one of the Sefton One Stop Shop offices in either Bootle or Southport or phone the Contact Centre on 0345 140 0845. Or email any questions to contact@sefton.gov.uk

The Minimum Income Floor (MIF) for Self-Employed persons

If you make a new claim for Council Tax Reduction after 31/3/2018 and you are not in receipt of Universal Credit, once your business has been running for 12 months or more, your claim for Council Tax Reduction could be calculated on your income from self-employment as outlined above or the Minimum Income Floor, whichever is higher.

The Minimum Income Floor is an amount of money that is equivalent to what you would receive if you were employed for 35 hours per week at minimum wage, after deducting an amount for income tax and national insurance contributions.

The MIF supports the basic principle or premise that once you have been running a business for an initial 12 month start up period your business should be providing you with, as a minimum, the equivalent of a full time income at minimum wage.

The council will not apply the minimum income floor in the following circumstances:

• You or your partner are carers and have an entitlement to Carers Allowance
• You or your partner are paid as an employee by an employer
• The council decide that your business was never intended to be gainful self-employment, meaning that the business was never intended to be your main employment or source of income.
• You or your partners have a disability for which you receive certain DWP disability benefits (e.g. Personal Independence Payment).
• Company Directors (registered with Companies House)

If you experience hardship as a result of the MIF being used to calculate your entitlement, you can make an application for additional help with your council tax through the council’s exceptional hardship fund.  Further information about this is given about this extra help further down this webpage.

If your income from self-employment has been significantly impacted by the Covid 19 pandemic, the minimum income floor will not be used to calculate your income from self-employment.

You will not be entitled to Council Tax Reduction if you have savings of £6,000 or above.

The amount of Council Tax reduction you may be entitled to, could be reduced if you have any other adults (aged 18 or over) living with you.  These adults are known as “Non-dependants”

Grown up sons or daughters or elderly relatives are usually classed as Non Dependants.  However, your partner and or any person who pays you rent (e.g. a Boarder or Lodger) are not.

Non-dependant deductions vary from zero, if they are getting certain means tested social security benefits, to a maximum of £5 per week if their gross weekly income (before deductions of Tax and NI etc) is above £256 per week.

Full list of all non-dependant deductions for 2024/2025 can be viewed in the 'downloads' section.

If you, (or your partner) receive any of the following disability benefits, or are registered blind, then the non-dependant deduction will not be made from your entitlement.

• Attendance Allowance,
• the daily living component of Personal Independence Payment (PIP)
• the care component of Disability Living Allowance (DLA)
• Armed Forced Independence Payment.

If you want to find out if you will qualify for help with your Council Tax, you can:

• Use the 'Check your eligibility' link here 
• Contact the Council's Welfare Officer on 0151 934 3946 who will assist you further.

In all cases Council Tax Reduction is shown as a reduction on your Council Tax demand.  If an award of Council Tax Reduction puts your council tax into credit, it will be held against next year’s council tax bill.  Alternatively, you can request a full refund of the credit balance.

When any decision is made on your Council Tax Reduction claim, you will receive a letter telling you about the decision.

If you think the decision is wrong, or if you want to know more about this decision, you must contact us within one calendar month of the date on your decision letter. If you delay, we may not be able to consider any dispute.
 
You can contact us by phone or in writing and can either:

• Ask for an explanation
• Ask us to look again at the decision

If the decision can be changed, we will send you a new decision. If we feel unable to change the original decision, we will tell you why.
 
After this, if you are still not happy, you can then ask for your appeal to be heard by an Independent Tribunal. You must make this request in writing to them within two calendar months of our reply. We will advise you of the full details if we dismiss your appeal.  Please note this is a separate appeals process to that for Housing Benefit.

Once you start receiving Council Tax Reduction, you must tell the benefit section about any changes in your own, or any members of your household's changes in circumstance that may affect your entitlement straight away.
 
It is important that you tell the benefit section as soon as possible once you have a change. This will ensure that you do not lose any extra entitlement to benefit you may have or reduce the amount of any overpayment that may occur.

What changes do I need to inform you about?

• Whenever you have a change of address.
• Whenever any person joins or leaves your household.
• Whenever the income or capital for anyone in the property has changed.
• Whenever anyone in the property goes onto, comes off or has a change in the amount of any Tax Credits or benefits received.
• Whenever anyone in the property starts or finishes work.
• Whenever there is a change in your childcare costs.

It is important to notify the benefit section within one calendar month of the date of the change to prevent any loss of entitlement to benefit or reduce the amount of any overpaid benefit that may happen due to the change.

How can I report a change in circumstances?

What is an overpayment?

An overpayment occurs when you have received benefit that you were not entitled to. Overpayments can occur due to various reasons, such as:

• You moving out of your home.
• Someone else moving in to or out of your home.
• You or a member of your household may have started work.
• You or a member of your household may have had an increase in your income or capital.

If you have been paid too much you will normally be asked to pay back the overpayment.

How will I be informed about an overpayment?

When an overpayment occurs we will write to you, the letter will tell you:

• The reason you have received too much
• A breakdown of the overpayment.
• How much the overpayment is.
• If you have to pay back the amount.
• How the overpayment will be recovered.
• How you can appeal if you think the overpayment is incorrect.

Do I have to repay the overpayment?

We will look at who has caused the overpayment and to who benefit has been paid and then make our decision if the overpayment is recoverable. Any overpayment will be debited to your Council Tax account and you will receive a new Council Tax demand. This will result in an increase in your monthly Council Tax Payments.
 

What if I do not agree with the overpayment?

If you disagree with the overpayment you must write in to the Benefits Section within one calendar month of the date on the decision letter. Your full appeal rights will be shown on the overpayment letter and the decision letter.

The Council Tax Reduction rules regarding temporary absence from your home can be fairly complex, but have been summarised below.

As a general rule, Council Tax Reduction can be paid for up to 13 weeks during an absence from your home regardless of the reason, if:

• You intend to return home; and
• Your home is not let or sub-let during your period of absence, and
• You expect your absence to be less than 13 weeks.
• You remain inside Great Britain.

In certain specific circumstances, you may be temporarily absent for up to 52 weeks and still receive Council Tax Reduction. For example, if you are:

• A hospital in-patient
• In a residential care home on a temporary basis
• Receiving medically approved treatment, care or convalescence
• Providing medically approved care or caring for a child whose parent or guardian is receiving medical treatment or medically approved care
• A prisoner on remand
• A vulnerable student
• Absent through fear of violence

If anyone is outside Great Britain

If you or anyone who normally lives with you, are absent from your home and you are also outside of Great Britain for a period of 4 weeks or more, your entitlement to Council Tax Reduction may reduce or end altogether.

If you would like to know more about the rules regarding temporary absence and if or how you could be affected by them, please contact the council directly for more information.

*Please note Great Britain DOES NOT include Northern Ireland, the Isle of Man or the Channel Islands.

If you are receiving Council Tax Reduction but the amount of Council Tax that you are being asked to pay is causing you financial hardship, you can apply for an Exceptional Hardship Payment, to help towards the remaining council tax bill that you are required to pay.

You can apply today by completing the application form in the 'do it online' section of this page.

To sign up for online notification letters, go to the View your claim and letters section here, choose 'Register for online letters' and enter your details. You will need your current claim reference to do this.