Council Tax Reduction Scheme in Wales: technical consultation on reassessment thresholds

Support with council tax bills through the Welsh Government’s Council Tax Reduction Scheme (CTRS) is a vital part of the wider welfare system for households on low incomes. This technical consultation proposes a targeted change to the scheme aimed at simplifying administration and improving financial certainty for residents, while maintaining support. The proposals are designed to make the scheme work more effectively for both councils and applicants.

Nothing in this consultation introduces new restrictions on eligibility nor alters anything else about the scheme.

This consultation applies to Wales only.

How to respond

Submit your comments by 23 September 2026, in any of the following ways:

• complete our online form
• download, complete our response form and email CTandNDR.Consultations@gov.wales
• download, complete our response form and post to:

Council Tax Policy
Welsh Government
Cathays Park
Cardiff
CF10 3NQ

Further information and related documents

Large print, Braille and alternative language versions of this document are available on request.

Contact details

For further information:

Council Tax Policy
Welsh Government
Cathays Park
Cardiff
CF10 3NQ

Email: CTandNDR.Consultations@gov.wales

This document is also available in Welsh: Cynllun Gostyngiadau’r Dreth Gyngor yng Nghymru: ymgynghoriad technegol ar drothwyon ailasesu | LLYW.CYMRU

The Welsh Government will be data controller for Welsh Government consultations and for any personal data you provide as part of your response to the consultation. 

Welsh Ministers have statutory powers they will rely on to process this personal data which will enable them to make informed decisions about how they exercise their public functions. The lawful basis for processing information in this data collection exercise is our public task; that is, exercising our official authority to undertake the core role and functions of the Welsh Government. (Art 6(1)(e)) 

Any response you send us will be seen in full by Welsh Government staff dealing with the issues which this consultation is about or planning future consultations. In the case of joint consultations this may also include other public authorities. Where the Welsh Government undertakes further analysis of consultation responses then this work may be commissioned to be carried out by an accredited third party (e.g. a research organisation or a consultancy company). Any such work will only be undertaken under contract. Welsh Government’s standard terms and conditions for such contracts set out strict requirements for the processing and safekeeping of personal data.

In order to show that the consultation was carried out properly, the Welsh Government intends to publish a summary of the responses to this document. We may also publish responses in full. We publish responses anonymously and your name and contact details will not be included. If you would like your name or other details published alongside your response, please let us know when you submit your response, and we will include them.

You should also be aware of our responsibilities under Freedom of Information legislation and that the Welsh Government may be under a legal obligation to disclose some information.

If your details are published as part of the consultation response then these published reports will be retained indefinitely. Any of your data held otherwise by Welsh Government will be kept for no more than three years.

Your rights

Under the data protection legislation, you have the right:

• to be informed of the personal data held about you and to access it
• to require us to rectify inaccuracies in that data
• to (in certain circumstances) object to or restrict processing
• for (in certain circumstances) your data to be ‘erased’
• to (in certain circumstances) data portability
• to lodge a complaint with the Information Commissioner’s Office (ICO) who is our independent regulator for data protection

For further details about the information the Welsh Government holds and its use, or if you want to exercise your rights under the UK GDPR, please see contact details below:

Data Protection Officer:

Welsh Government
Cathays Park
CARDIFF
CF10 3NQ

e-mail: dataprotectionofficer@gov.wales

The contact details for the Information Commissioner’s Office are: 

Wycliffe House
Water Lane
Wilmslow
Cheshire SK9 5AF

Tel: 0303 123 1113

Website: https://ico.org.uk/

The Welsh Government is committed to continually improving its CTRS, which provides vital support to around 256,000 low-income households across Wales. Since the introduction of the scheme in 2013, we have continued to protect vulnerable and low-income households by maintaining full entitlements to support. We expect there to be a continued need to provide a scheme and we are reviewing the legislation, scheme design, and administration, with the aim of making the CTRS easier to access and easier to administer. It is important to emphasise however, that the CTRS is not being removed or eligibility restricted. A working group of local authority practitioners is assisting the consideration of improvements, alongside regular engagement with advice networks.

Focus of this consultation

As our ongoing review of CTRS continues, this technical consultation focuses on practical changes that could be implemented in 2027-28 to address the volume of reassessments caused by Universal Credit fluctuations, to reduce administrative complexity, while maintaining support for households.

The introduction of Universal Credit (UC) has fundamentally changed the way household income is assessed for benefit purposes. Under UC, income is assessed on a monthly basis, using real-time information from HMRC. This differs from legacy benefits, where income is typically averaged over a longer and more stable period. As a result, households receiving UC can experience more frequent recorded income fluctuations.

Reassessment issues began to emerge as the rollout of UC gathered pace. Research commissioned by the Welsh Government from Policy in Practice in 2020 found that the move to UC was beginning to create a structural issue for CTRS, potentially leading to significantly more frequent CTRS reassessments in the future, higher administrative costs and confusion for applicants. As more claimants have moved onto UC in Wales from legacy benefits in the intervening years, the matter of reassessments has become more prominent. Further research into this issue has considered how some councils in England have sought to address the volume of reassessments.

Because changes in a person’s income trigger a reassessment of UC, and therefore a reassessment of their entitlement to CTRS, the move to UC has led to an increase in the frequency of reassessments for working-age households. Analysis of monthly data indicates that, over a 12‑month period, 26% of UC households experienced at least one income change, compared with 8% of households receiving legacy benefits. As a result, CTRS claims for UC households required around four times as many reassessments as those under legacy welfare arrangements.

Administrative impact on councils

The increased frequency of reassessment creates additional administrative pressure on councils. Costs arise across the end‑to‑end process, including processing reassessments, issuing revised council tax bills, and responding to increased enquiries from residents. More frequent changes to CTRS awards can also lead to households receiving multiple bills within a short period, adding complexity to council tax collection and recovery activity.

Impact on applicants

For applicants, frequent reassessments can create confusion and uncertainty about ongoing council tax liability. Repeated changes to bills make it harder for households to understand what they are expected to pay and can increase the risk of arrears, particularly for those on low and fluctuating incomes. Evidence from applicant surveys also suggests wider confusion among UC recipients about how CTR operates, including misunderstandings about whether CTRS is included within UC.

Tolerance thresholds as a potential mitigation

Some councils in England have introduced tolerance thresholds, under which small changes in income are ignored for CTRS reassessment purposes. These are typically set at around £65 per month. 

Analysis of Welsh data indicates that such a threshold would prevent 61% of reassessments for UC cases. Importantly, the modelling indicates that applying a £65 tolerance threshold would be broadly cost‑neutral for CTRS schemes, as small increases and decreases in awards tend to offset each other. For applicants in receipt of partial CTRS awards modelling demonstrates that an increase or decrease of £65 per month would equate to maximum reduction or increase in a CTRS award of around £3 per week.

The Welsh Government considers that the challenges outlined above arise primarily from the design of UC, rather than from local CTRS rules. Without mitigation, UC is likely to continue driving higher reassessment volumes, increased administrative costs for councils, and ongoing confusion for residents.

We therefore propose to introduce, through regulations, a tolerance rule for small changes in UC awards. Under this proposal:

• small changes to UC payments (within the tolerance level) would not trigger a CTRS reassessment.
• CTRS awards would remain unchanged unless or until UC changes by more than the tolerance.
• no revised council tax bills would be issued to households; and
• there would be no change to the council tax amount payable.

Analysis of UC awards over the past 12 months, alongside evidence from other councils that have already introduced similar measures, suggests that a tolerance level of £65 per month provides the best balance between risk and impact.

Indications are that this would: 

• reduce the number of CTR support reassessments for residents 
• reduce the number of council tax adjustment notices sent to residents 
• reduce the number of council tax payment changes imposed on residents 
• provide stability for council tax repayments and for council tax recovery 
• reduce customer contact

Who would be affected?

Most UC recipients experience regular small increases or decreases in their UC awards. Over time, the impact on individual CTRS awards is expected to result in very small net gains or losses. UC changes above the £65 monthly tolerance would continue to be processed as usual. Residents of pension age, or those still receiving legacy benefits, would not be affected by this change.

An illustrative example showing how the proposed tolerance would operate is included at Annex A. The outcome of this example is that the volume of CTRS reassessment is reduced to 3 reassessments from 7 in a 12-month period, under the tolerance proposal.

We believe these changes would reduce confusion for households and provide greater certainty to help people manage their finances, whilst still broadly tracking non-minor income changes. For councils, the changes are expected to deliver significant administrative savings.

If implemented, we propose these changes would commence on 1 April 2027.

Affordability 

Affordability is a key consideration for both residents receiving a council tax reduction and the councils responsible for administering the scheme.

For residents, the proposed tolerance rule is intended to improve financial stability and predictability, rather than change overall levels of support more frequently. By preventing small and frequent UC changes from triggering repeated CTRS reassessments, residents would be less likely to receive multiple revised council tax bills within short periods. This greater stability should make it easier for households, particularly those on low or fluctuating incomes to understand their council tax liability, budget effectively, and reduce the risk of arrears. 

For councils, the proposal is expected to be financially manageable and broadly cost neutral. While the overall value of CTRS awards is not expected to change significantly, reducing the number of reassessments would lower administrative costs associated with processing changes, issuing revised bills, handling enquiries, and managing recovery activity. This would allow councils to deploy resources more efficiently while continuing to provide effective support to residents. Less households at risk of falling into council tax arrears for small amounts also benefits councils.

Overall, we believe the proposal strikes an appropriate balance by improving affordability in practical terms for residents, while remaining affordable and viable for councils to implement within existing funding arrangements. The introduction of the tolerance level will be monitored through Welsh Government collaborative networks with local government and advice services.

Below is an example of how the proposed council tax tolerance rule is applied based on an ‘assumed tolerance level’ of plus/minus £65 per month.

Month: April 2025
Actual Universal Credit amount: £1,000
Council Tax Reduction award: £40
Basis of the award: Initial CTR award of £40 based on a £1,000 UC amount

Month: June 2025
Actual UC amount: increases to £1,050. This is within the tolerance level.
CTR award: not reassessed, remains at £40.
The UC amount has increased from £1,000 to £1,050. As this increase (£50) is within the £65 tolerance level, the CTR award is not reassessed and remains at £40. 
Baseline UC amount used for the CTR award remains £1,000.

Month: July 2025
Actual UC amount: increases to £1,100. This is no longer within the tolerance level
CTR award: reassessed at £35.
The UC amount has increased from £1,000 to £1,100. As this increase (£100) exceeds the £65 tolerance level, the CTR award is reassessed and reduced to £35. 
Baseline UC amount used for the CTR award is reset to £1,100.

Month: August 2025
Actual UC amount: increases to £1,150. This is within the tolerance level
CTR award: not reassessed, remains at £35.
The UC amount has increased from £1,100 to £1,150. As this increase (£50) is within the £65 tolerance level, the CTR award is not reassessed and remains at £35. 
Baseline UC amount used for the CTR award remains £1,100.

Month: October 2025
Actual UC amount: falls to £900. This is no longer within the tolerance level.
CTR award: reassessed at £45.
The UC amount has decreased from £1,100 to £900. As this decrease (£200) exceeds the £65 tolerance level, the CTR award is reassessed and increased to £45. 
Baseline UC amount used for the CTR award is reset to £900.

Month: November 2025
Actual UC amount: increases to £950. This is within the tolerance level.
CTR award: not reassessed, remains at £45.
The UC amount increases from £900 to £950. As this increase (£50) is within the £65 tolerance level, the CTR award is not reassessed and remains at £45. 
Baseline UC amount used for the CTR award remains £900.

Month: December 2025
Actual UC amount: decreases to £900. This is within the tolerance level.
CTR award: not reassessed, remains at £45.
As there is no change to the UC amount for the CTR award, it remains at £45. 
Baseline UC amount used for the CTR award remains £900.

Month: March 2026
Actual UC amount: falls to £830. This is no longer within the tolerance level.
CTR award: reassessed at £48.
The UC amount decreases from £900 to £800. As this decrease (£70) exceeds the £65 tolerance level, the CTR award is reassessed and increased to £48.
Baseline UC amount used for the CTR award is reset to £830.

The outcome of the introduction of a tolerance level reduced the volume of Council Tax Reduction Scheme reassessments to 3 reassessments instead of 7 during the period from April to March.

We would be very grateful for your views about the proposals outlined above. 

1. Do you, or does someone in your household, receive support from the Council Tax Reduction Scheme at this time? 

Yes/No/Unsure

This is a stakeholder response

2. The Welsh Government is proposing to reduce the frequency of Council Tax Reduction Scheme reassessments for Universal Credit recipients where income fluctuates. Do you agree that the Welsh Government should introduce a tolerance to minor frequent Universal Credit award changes, for residents receiving support from the Council Tax Reduction Scheme?

Strongly agree
Agree
Neither / nor
Disagree
Strongly disagree

3. The Welsh Government is proposing to introduce a tolerance level of £65 per month, which would freeze a resident’s Council Tax Reduction Scheme award if their Universal Credit award increased or decreased by less than £65 per month. Do you agree this is an appropriate tolerance level?

Strongly agree
Agree
Neither / nor
Disagree
Strongly disagree

4. If you do not agree with a £65 per month tolerance level, what do you think would be an appropriate amount and why?

Comments

Welsh language impacts 

5. What, in your opinion, would be the likely effects of the proposals on council tax reduction on the Welsh language? We are particularly interested in any likely effects on opportunities to use the Welsh language and on not treating the Welsh language less favourably than English. 

• Do you think that there are opportunities to promote any positive effects?
• Do you think that there are opportunities to mitigate any adverse effects?

Comments

6. In your opinion, could the proposals on council tax reduction be formulated or changed so as to:

• Have positive effects or more positive effects on using the Welsh language and on not treating the Welsh language less favourably than English; or 
• Mitigate any negative effects on using the Welsh language and on not treating the Welsh language less favourably than English?

Comments

Other issues not covered

7. We have asked a number of specific questions. If you have any related issues which we have not specifically addressed, please use this space to report them.