Understanding the New Council Tax Reduction Regulations in Scotland

The Scottish Government has introduced the Council Tax Reduction (Miscellaneous Amendment) (Scotland) Regulations 2025, a set of rules aimed at refining how council tax reductions are calculated for Scots. Here’s a breakdown of what you need to know about these changes:

Key Amendments:

1. Annual Uprating: The 2025 regulations will adjust the allowances, premiums, and deductions used to calculate council tax reductions by 1.7%, matching the Consumer Prices Index from September 2024. This ensures that households aren't financially disadvantaged compared to the old Council Tax Benefit system.

2. Universal Credit Adjustments:

   • Clarification has been made regarding what constitutes an award of Universal Credit. This is crucial for calculating council tax reductions for those whose Universal Credit payments are reduced to zero due to high earnings.
   • Importantly, the regulations ensure that claimants with zero awards due to sanctions or high earnings continue to be treated as having an award, maintaining their eligibility for council tax reduction.

3. Working Tax Credit Transition: For those transitioning from Tax Credits to Universal Credit, a 12-month grace period has been introduced. During this period, any deferred retirement income will not be counted as income, which can affect eligibility and reduction calculations.

4. Childcare Costs: To align with changes in Universal Credit, the maximum allowable childcare costs for council tax reduction calculations will increase, ensuring that increases in Universal Credit childcare elements do not inadvertently reduce council tax reductions.

5. Correction of Errors: The regulations correct a minor error concerning the terminology of disability payments.

Impact and Consultation:

• The regulations are deemed compatible with the United Nations Convention on the Rights of the Child, ensuring children's rights are protected.
• While no formal consultation was conducted, the changes do not financially impact the government or businesses, hence no Business Regulatory Impact Assessment was needed.

These amendments aim to streamline the council tax reduction process and ensure fairness and clarity, particularly for those interacting with Universal Credit and transitioning from previous benefits systems.