Do Pensioners Pay Council Tax?

The cost of living is incredibly rapidly, and one area that isn’t immune to this is Council Tax. Most pensioners will see their regular income reduced when they retire and rely on the State Pension to fund a large part of their living costs. With this in mind, do pensioners pay Council Tax? The answer is that yes, pensioners generally do have to pay Council Tax.

However, depending on their circumstances they may be eligible for what's known as a Council Tax Reduction. This reduction can be as much as 100% of the Council Tax bill, so it is well worth looking into whether you might be eligible. 

In this article, we’ll explain the standard rules for Council Tax that apply to pensioners, but also how a Council Tax Reduction works and who is eligible for one.

Why Do We Pay Council Tax?

Many of the services that rely on and use on a daily basis are funded by the Council, which is also known as the Local Authority. Examples of the types of services that are funded by the Local Authority include your weekly bin pickup, road and street light maintenance, child protection and maintenance of public spaces like parks and road verges.

Providing all of these services costs money, and lots of it. The Local Authority does receive some funding from the government in Westminster, but a large portion of it comes from our Council Tax bills.

How is Council Tax Calculated?

The way that Council Tax is calculated is honestly a bit strange. The current system was put in place back in 1991, and at that time every property in the country was valued and lumped into a Council Tax Band based on the value. These bands go from A to H with A being the lowest value properties, and therefore the lowest Council Tax Bill, and H being the highest value properties with the largest bills.

This was such a big job at the time that it was done in a hurry. The UK Government tasked local real estate agents with providing valuations, and many of them were done without really looking properly at the property value.

Re-valuations have since been done in Wales (though this was still a long time ago - 2003), but Scotland and England still rely on these initial valuations to assess your level of Council Tax.

Are You in the Wrong Council Tax Band?

This leads to the first situation that may allow you to reduce your Council Tax bill. It is possible to challenge your Council Tax Band. If you know of similar properties in your area that pay less than you do for Council Tax, it may be that your property was incorrectly valued back in 1991. 

In order to challenge your band, you’ll need to have supporting evidence as to why you believe you’re paying too much. You can find more information on how to challenge your council tax band on the government website here. Keep in mind that it’s a different process for Scotland, and you can find that information here.

Why Do Pensioners Have to Pay Council Tax?

You may be wondering why pensioners have to pay Council Tax, given that many can be struggling to make ends with with the State Pension. The important thing to keep in mind, is that the State Pension isn’t means tested. This means that anyone who has enough of a National Insurance record from their working or family life is able to claim the State Pension.

This creates a situation where there are any pensioners who are very wealthy. Some people who are receiving a full State Pension will also have millions of pounds in investments and property assets. Many will be receiving both a State Pension and a workplace pension. This makes it unreasonable for there to be a blanket discount or exemption from paying Council Tax, as many pensioners can easily afford to pay it. For other pensioners who aren’t wealthy, there are other avenues you can look into to potentially reduce your Council Tax bill.

What is a Council Tax Reduction?

A Council Tax Reduction is a benefit that is designed to provide support with Council Tax for people who are on specific benefits or a low income. This is unlike many benefits in that it is operated by each individual Local Authority, so the details will depend on where you live and how your Local Authority operates the scheme.

The amount of support that you might be eligible for will depend on a range of different factors, including:

• Your income

• How much money you have in the bank or investments

• How old you are

• Who you live with

• Your Council Tax Band

• Your benefits

Your Local Authority will assess how affordable your Council Tax bill is, and if they decide you are eligible you could get a discount on your tax bill. If you’re in receipt of Pension Credit, you might even get 100% of your Council Tax discounted.

If you want to look into applying for this, you can find more information at this website. If you’re not eligible for a Council Tax Reduction, there are some other ways that you might be able to reduce your bill.

Council Tax Discount if Your Living Alone

The standard rate of Council Tax is based on 2 adults living in a property. If you are living along, this means that you may be eligible for a 50% reduction on your council tax to compensate for the fact that you are using less services than you would be if there were 2 adults living in the home.

Keep in mind that it is 2 adults that this is based on. If you have children under the age of 18, or adults who are in full time education, you may still be eligible. This reduction is what’s known as a Single Person’s Discount, and if you believe you may be eligible you should contact your Local Authority.

Council Tax Band Disability Reduction

The last main way that you can potentially receive a reduction on your Council Tax is if you or someone you live with has a disability. This is designed to recognise the fact that some people need extra space or facilities to meet their needs, and will likely have a larger property than they would otherwise have.

If you qualify for a Disability Reduction, your property will be assessed on one band lower than it is currently. For example, if your property is currently assessed as a band B, you will pay Council Tax based on a band A. If your property is already on the lowest band, A, you’ll get a 17% discount instead. 

In order to qualify for this discount you need to show that there there is space in the property that is required to cater for the resident with a disability. This could be an extra bathroom or a downstairs bedroom, or it could be extra space inside to accommodate a wheelchair. 

Someone from the Council will come and assess the property and confirm that your claim is legitimate, however it is not an invasive or onerous process. Usually they will simply come to the property for a quick look around and a chat.

Summary

In most cases pensioners will need to pay some level of Council Tax. Depending on their level of income and assets, they may be eligible for a reduction on their bill meaning they won’t need to pay the full rate. In addition to the reductions based on income and assets, there are other ways to seek a reduction in council tax, such as based on being a single adult in the home or having someone in the home with a disability.

If you think you might be eligible for a discount or exemption on your council tax, you should speak to your Local Authority.