Friday, 25 July 2014

Council Tax reduces Disability Care Contributions

Currently a lot of people who had previously been eligible for full Council Tax Benefit are finding themselves hit by Council Tax bills. This includes many people on very low incomes unable to simply "go and get a job", such as carers and disabled people on ESA.

There is however one silver lining for disabled people who are paying social services for their care. This new policy might be cushioned slightly by a reduction in their contribution to their care costs.

Social services are supposed to deduct the amount paid in council tax from what the disabled person pays them towards their care.

Anyone who has had a financial assessment from social services and is paying toward their care should check to see whether council tax has been taken into account. (This will normally be listed under "weekly allowances".)

(Note: see below for comments re Bedroom Tax and PIP.)


The reason behind this can be found in the fine print of the "Fairer Charging Policies for Home Care and other non residential Social Services"

Paragraph 23 states that
Housing costs and Council Tax should be assessed net of any Housing Benefit or
support under the local Council Tax Reduction Scheme.
"Income should be assessed net of any Income Tax and National Insurance contributions payable and net of housing costs and Council Tax."
The thing to remember here is that "Income" for social services is not someone's actual income but the "eligible income", ie the income that is earmarked for care.

For instance to encourage disabled people to move into work, earnings and tax credits do not count as income. On the other hand benefits such as ESA do.
So rather ironically, someone on a salary of £50,000 pa would be said on paper to have an income of £0 per week, whereas someone on ESA has an income of over £100.

Social services cannot take as much money as they like, but must leave the disabled person with "Income support +25%".
They must also take into account essential disability related expenses, although in practise this varies wildly from council to council.
This is the "Fairer Charging Policy".

So essentially social services work out the disabled person's income and subtract

  • Any housing costs left over after housing benefit, 
  • Any council tax left over after council tax reduction scheme,
  • Earnings, tax credits etc
  • Benefits which aren't allowed to be used for care (eg mobility DLA)
  • Disability expenses

They then take anything left over (if possible) while still leaving the disabled person with money equivalent to "income support +25%".

Note: Care contributions can vary greatly dependent on what disability premiums people are eligible for and how generous councils are when taking into account disability related expenditure.
Many people don't have to pay anything. My own contribution has been as high as £96 per week and as low as £56 per week.
Ironically when I could still work and earned twice as much as I do now I didn't pay a penny!

Very Important Comment regarding Bedroom Tax

Given that social services must take into account housing costs there is a query as to whether this includes the bedroom tax for those affected by it.

The following (paragraph 23) would indicate that it should:
Housing costs and Council Tax should be assessed net of any Housing Benefit or
support under the local Council Tax Reduction Scheme.
It could be argued that the bedroom tax is a housing cost left over after housing benefit has been paid. If so, then the disabled person's calculated "income" is lower and their contribution should either drop by that same amount (if possible) or drop to 0.
For instance if someone was paying £30pw, they would only pay £16.
If someone was paying £9pw, they would now pay £0.

Disclaimer: While I know for certain that some social services do take council tax into account (my own do), I do not know their policy with regards to bedroom tax. However given this guidance it could well be worth a query.

Comment regarding DLA vs. PIP

If social services only provide day care then they can only count mid rate care DLA as income even if the disabled person receives the high rate of DLA.
As PIP doesn't differentiate between night and day care, the new rules state that that social services are justified in counting all of PIP as income.
This means that someone on mid rate DLA or standard PIP who is upgraded to enhanced rate PIP might not see a penny of it. It could be swallowed up in care contributions.
In practise the government is leaving this to the discretion of individual councils. In the long term this means that we can expect to see a postcode lottery as to whether individuals have the entirety of their enhanced PIP award taken as a care contribution.

An Example of a Financial Assessment

A financial assessment might look something like this
Let's consider a hypothetical disabled person receiving a care package worth £140 in direct payments.
They are in the support group of ESA but are able to do 2 hours of permitted work per week for which they receive £20 in earnings.
They also receive DLA high rate mobility and mid rate care.
They receive LHA but have to top up their rent by £8.00 per week.
Social services have recognised disability related expenses with regards to their wheelchair, other specialist equipment and an alarm system in case of falls. However they refuse to take into account dietary requirements, heating and other increased costs.

Weekly Income (including DLA both care and mobility):

  • DLA Middle Rate Care £54.45
  • DLA Higher Rate Mobility £56.75
  • ESA core component  £72.40
  • ESA support component  £35.75
  • ESA Enhanced disability premium  £15.55
  • 2 hours permitted work per week (earnings)  £20
Total = A = £254.90

Weekly Allowances: (disregarded income such as earnings and benefits not earmarked for care, money set aside for disability expenditure, council tax and housing costs, amount required by law to leave to live on)

  • DLA Higher Rate Mobility -£56.75
  • 2 hours permitted work (earnings)  -£20
  • Specialist Equipment -£6.73
  • Wheelchair maintenance -£3.85
  • Alarm button service  -£3.50
  • Council Tax  -£5.76
  • Rent Top Up -£8.00
  • Weekly Allowance under 60 (= Income support +25%) -£130.31

Total = B = £-234.90

Net Disposable Income = A-B = £20
Cost of Care Package = C =£140 (14 hours of direct payments at £10 per hour)
Care Contribution = the smaller of C or A-B, = £20.

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