A regular query which arises is to why a Council Tax discount is set at either 25% or 50%. The particular reasons for this are set out in legislation.
The theory behind a Council Tax discount
The basic principal behind Council Tax is that it consists of two main components – 50% of the charge in respect of the property itself and 50% in respect of the (notional 2) occupiers of the property. It is this split that affects the discounts which are available.
Section 11 of the Local Government Finance Act 1992
Section 11 of the Local Government Finance Act 1992 sets the level of discount which can be awarded to an occupied property. This states that
(1)The amount of council tax payable in respect of any chargeable dwelling and any day shall be subject to a discount equal to the appropriate percentage of that amount if on that day—
(a)there is only one resident of the dwelling and he does not fall to be disregarded for the purposes of discount; or
(b)there are two or more residents of the dwelling and each of them except one falls to be disregarded for those purposes.
The level of discount to be given is also set in the same section:
(3)In this section “the appropriate percentage” means 25 per cent. or, if the Secretary of State by order so provides in relation to the financial year in which the day falls, such other percentage as is specified in the order.
As can be seen above the (notional) 2 occupiers account for 50% of the charge. If there is only one occupier for Council Tax purposes then a discount of half of the 50% is given (i.e. 25% of the overall charge for a single person discount)
A similar situation will apply if there are either no occupiers or all of the occupiers are disregarded for Council Tax purposes.
(2)Subject to sections 11A and 12 below, the amount of council tax payable in respect of any chargeable dwelling and any day shall be subject to a discount equal to twice the appropriate percentage of that amount if on that day—
(a)there is no resident of the dwelling; or
(b)there are one or more residents of the dwelling and each of them falls to be disregarded for the purposes of discount.
As can be seen above the (notional) 2 occupiers account for 50% of the charge. If there are no occupiers or all of the occupiers are disregarded for Council Tax purposes then a discount of the 50% occupancy component is given (i.e. 50% of the overall charge)
More than 2 occupiers
If there are more than two occupiers then the Council Tax charge does not increase with the number of occupiers. As long as there are at least two occupiers who are not disregarded for any reason then the charge remains at a maximum of 100%.
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This article is solely the view of LGFA92, the Council Tax experts, based on our interpretation of legislation. Your local authority is free to dispute this view. A binding decision may require the intervention of a valuation tribunal.