United Kingdom

Low income and council tax

Key points

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Graph 1: Over time

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Graph 2: By age group

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Graph 3: By household type

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Why this indicator was originally chosen

Council Tax is widely considered to be a higher burden on low-income households than either income tax or national insurance.  The fact that households in income poverty can nonetheless be paying Council Tax is a matter of concern and one which the Government could potentially do something about.

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Definitions and data sources

The first graph shows, for each year, the proportion of people living in low-income households where the household is paying the full amount of Council Tax (i.e. is not in receipt of any Council Tax Benefit).

The second graph shows how the people living in low-income households where the household is paying full Council Tax divide by age group.  To improve its statistical reliability, the data is the average for the latest three years.

The third graph shows, for selected family types, the proportion of families living in low-income households where the family is paying the full amount of Council Tax.  To improve statistical reliability, the data is the average for the latest three years.

The data source for all the graphs is Households Below Average Income, based on the Family Resources Survey (FRS).  The data relates to England and Wales (in Scotland, Council Tax and water charges are paid as part of the same bill so it is not possible to distinguish people who are paying no Council Tax and the Northern Ireland system is different).  Income is disposable household income after deducting housing costs and is equivalised (adjusted) for household size and composition.  The low-income threshold is that used elsewhere, namely 60% of median household income after deducting housing costs.

The Households Below Average Income dataset records Council Tax data at the 'household' level but records work status data at the 'family' level (The term 'family' is used to cover an adult and their spouse - if applicable - whereas the term 'household' is used to cover everyone living in a dwelling.  So, a young adult living with their parents would count as one 'household' but two 'families'.).  In analysing the proportions paying full Council Tax by work status in the third graph, the work statuses are those for the family within household who is actually responsible for the Council Tax (so, in the example above, the work status is that of the parents rather than the young adult).  Note also that, unlike the first two graphs, the data in the third graph is a count of households rather than a count of individuals.

Overall adequacy of the indicator: medium.  The FRS is a well-established annual government survey, designed to be representative of the population as a whole.  However, the Council Tax data relates to a survey of what people said they were paying rather than to their actual bills.

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External links

See the centre for council tax reform website.

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Relevant 2007 Public Service Agreements

None directly relevant.

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The numbers

Graph 1

Year Paying full Council Tax
1994/95 49%
1995/96 46%
1996/97 45%
1997/98 45%
1998/99 45%
1999/00 48%
2000/01 51%
2001/02 52%
2002/03 54%
2003/04 55%
2004/05 57%
2005/0658%
2006/0760%
2007/0859%
2008/0962%

Graph 2

Age group Paying full Council Tax
Working-age adults 3.9M
Children 1.9M
Pensioners 1.2M

Graph 3

Household type Paying full Council Tax
Working-age households where someone is working 87%
Pensioner households 66%
Working-age households without children where no one is working 31%
Working-age households with children where no one is working 13%

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