Council tax support for working-age households in England could be integrated into Universal Credit to simplify the system and strengthen work incentives, says the Institute for Fiscal Studies (IFS).
Council tax support, which helps low-income households reduce their council tax bills, has been locally designed and administered by English councils since 2013–14, resulting in a wide range of schemes with differing levels of generosity and eligibility rules.
According to the IFS’ report, the overall value of working-age support in England has fallen by around £630m since localisation, partly due to reductions in central government funding.
This multi-million-pound cut has hit the poorest households the most, reducing their disposable incomes by £106 a year (or 1%) on average.
The report also highlights concerns about ‘banded’ schemes used by some councils, where entitlement drops sharply when incomes cross thresholds, potentially creating high marginal tax rates.
The IFS argues that integrating the support into Universal Credit could reduce complexity for claimants and administrative burdens for councils, though notes that reforms could also create some financial risks.
