Council Tax Reduction Scheme: a better, fairer approach

The Council is consulting residents on changes to the support available to working-age households who are on a low income. The rules for pension-age households are set nationally and are unaffected. Households occupied entirely by full-time students are also unaffected.

The proposals are designed to allow generous initial support as Council Tax increases, while ensuring the scheme:

a.    becomes financially sustainable
b.    means everyone contributes something towards the cost of the local services they use, and
c.    extends help to some low-income households who currently receive no Council Tax Reduction at all.

Why does the Council plan to change the scheme?

Wandsworth is facing significant financial pressures because of central funding cuts. Unless the Government changes its position, Council Tax will need to rise by around 94% next year.

The Council wants to protect those on the lowest incomes from a large, one-off increase to their bills. Therefore, support provided through the Council Tax Reduction Scheme will rise significantly, from around £6.9 million now to £12.4 million in 2027/28, before gradually reducing back to £7.1 million by 2030/31. This four-year approach phases the impact of higher Council Tax by adjusting the scheme’s discounts each year to allow a smooth transition.

The Council Tax Reduction Scheme is funded through Council Tax revenue. Were the current discounts left unadjusted, the scheme would have an ongoing, annual cost of nearly £14 million.  The Council does not believe it would be right or financially sustainable to allow the cost of the scheme to permanently increase in this way.

Will the scheme make Council Tax more expensive for other taxpayers?

No. The proposed increase to Council Tax in 2027/28 is based on balancing the general fund budget at zero in 2030/31, with no surplus or use of reserves in that year and no further tax increases assumed. Because the Council Tax Reduction Scheme will return to an overall cost of £7.1 million by 2030/31, the initial cost isn’t a factor in the proposed increase of 94%.

Why is the Council proposing that everyone contributes something?

Council Tax helps pay for the services that residents use every day – including waste collection, support for older people and other local services.
 
The Council believes there is an important principle of fairness in asking everyone who uses Council services to contribute something towards those services. At present, some working-age households can receive 100% Council Tax Reduction, meaning they pay no Council Tax. This wasn’t the case previously and isn’t fair.
 
The proposed scheme would remove 100% discounts for working-age households. Instead, everyone would make some contribution, while households on lower incomes would continue to receive substantial support.
 
This does not mean that everyone will pay the same amount. The amount of support would continue to depend on household circumstances and income. Those on the lowest incomes would receive the greatest levels of support.

A fairer deal for more people

These proposals change the way the scheme works so that more low-income working households can receive support.
 
Under the current scheme, households whose earnings are just above the existing thresholds can receive no Council Tax Reduction at all. The proposed scheme introduces new income bands for these households.
 
This means that people who currently fall just outside the scheme will receive help with their Council Tax for the first time. This is a fairer approach and will help them to adjust.

A scheme that supports those who need it while remaining affordable

The Council believes these proposals represent a better, fairer and more sustainable balance: support for those who need it, a contribution from everyone, time for households to adjust and a Council Tax Reduction Scheme that the Council can afford to maintain alongside the essential services residents rely on.
 

Have your say

These are proposals, not yet final decisions.
 
The Council is consulting residents before a final decision is made. If approved, the changes would take effect from 1 April 2027.

The consultation will be launched shortly, and residents will be encouraged to share their views through the Council's questionnaire.