Discretionary Council Tax Reduction: Getting Extra Help When the Standard Scheme Is Not Enough

Many people know about the main council tax reduction (CTR) scheme, which reduces bills for those on low incomes. But fewer people know that most councils in England also have a separate discretionary power to provide extra help in hardship cases — and that this power can sometimes eliminate a council tax bill entirely.

What Is Discretionary Council Tax Reduction?

Under Section 13A of the Local Government Finance Act 1992, English councils have the power to reduce any council tax bill — including to zero — for any person they consider appropriate. This is a broad discretion that sits alongside the main council tax reduction scheme.

In Wales, similar powers exist under the council tax reduction scheme regulations.

Councils use this power in different ways. Some have formal discretionary hardship funds. Others consider applications case by case. Not all councils publicise this option, but it exists at every local authority in England and Wales.

Who Can Apply?

There is no set eligibility criteria for discretionary council tax reduction — that is the point of the discretion. However, in practice, councils tend to consider applications from people who:

• Are already receiving the maximum council tax reduction under the standard scheme but still have a balance to pay
• Are in severe financial hardship that makes it genuinely impossible to pay the remaining council tax
• Have experienced a sudden change in circumstances — job loss, bereavement, health crisis — that has left them temporarily unable to pay
• Are in a vulnerable situation — serious illness, disability, mental health difficulties — that the standard scheme does not fully account for
• Are caring for a severely disabled family member and have limited income

You do not need to be receiving the maximum standard CTR to apply for discretionary help — but councils are generally more likely to grant it where the standard scheme has already been maximised.

How to Apply

There is no standard national application form for discretionary council tax reduction. The process varies by council. To apply:

1. Contact your local council’s revenues or council tax department and ask specifically about their discretionary council tax reduction or hardship scheme.
2. Ask whether there is a specific application form or whether you should write to them directly.
3. Set out your situation in writing — be specific about your income, outgoings, assets, and the nature of the hardship you are facing.
4. Include supporting evidence: bank statements, benefit letters, medical evidence, payslips, or anything else that demonstrates your circumstances.
5. If you have a debt adviser or support worker, ask them to write a supporting letter.

What Can It Cover?

Discretionary reduction can cover part or all of the remaining council tax bill. It can also apply to council tax arrears from previous years, not just the current year’s bill. If the council grants discretionary relief, it may be:

• A one-off reduction for the current year
• A reduction covering a specific period of hardship
• A write-off of outstanding arrears
• An ongoing reduced bill while the hardship continues

The council will specify the terms when they notify you of their decision.

What If the Council Refuses?

Councils have genuine discretion to decide whether to grant this reduction and by how much. There is no automatic right of appeal to the Valuation Tribunal for England in the same way as there is for standard council tax reduction decisions. However:

• You can ask for an internal review of the decision.
• You can make a formal complaint through the council’s complaints process if you believe the decision was made unreasonably or without properly considering your circumstances.
• If the complaint is not resolved, you can escalate to the Local Government and Social Care Ombudsman (in England) or the Public Services Ombudsman for Wales.

The Ombudsman can investigate whether the council followed a fair process, even if they cannot compel a specific outcome on the discretion itself.

How This Differs from Council Tax Reduction (CTR)

The standard CTR scheme reduces bills based on income and household circumstances. It has specific eligibility rules set by the council (in England) or national regulations (in Wales). Discretionary reduction is separate and additional — it fills the gap where the standard scheme does not fully cover the need.

You can apply for both simultaneously. In fact, applying for standard CTR should normally be the first step, with a discretionary application following if the standard relief is not sufficient.

Council Tax Hardship Funds (COVID-19 Legacy)

During the COVID-19 pandemic, the government provided councils in England with Council Tax Hardship Funds specifically to help working-age CTR claimants. These funds have largely been spent, but some councils retain discretionary hardship budgets funded from their own resources. Ask your council specifically whether any hardship fund still exists.

Getting Help With Your Application

A strong application sets out your situation clearly, provides good evidence, and references your vulnerability or the exceptional nature of your hardship. If you are unsure how to frame your case, Council Tax Advisors can provide free guidance. Citizens Advice also has advisers who can help you draft and submit a discretionary reduction application.

Summary

1. Under Section 13A, councils in England can reduce council tax bills — including to zero — for anyone in hardship
2. There is no fixed eligibility criteria — it is at the council’s discretion
3. Apply in writing, with supporting evidence of your circumstances
4. Standard council tax reduction should be applied for first — discretionary relief fills the gap
5. If refused, you can request an internal review and escalate to the Ombudsman if the process was unfair
6. Discretionary reduction can cover current and past year arrears, not just future bills

If you are in financial hardship and struggling to pay council tax even after receiving standard council tax reduction, contact Council Tax Advisors. We can help you make the strongest possible case for discretionary relief.

Disclaimer: This article is for general information only and does not constitute legal or financial advice. Rules vary between local authorities. Seek independent advice for your specific situation.