Petition details
Scrap the current Council Tax Reduction Scheme for the Self Employed
On 1 April 2017, Tower Hamlets Council introduced a policy that removed full Council Tax Reduction Scheme from its self-employed residents. The policy change to begin charging council tax to the self-employed was approved by the council’s Cabinet and the Mayor, John Biggs, on 10 January 2017. The current Labour Administration (Councillors and Mayor) in Tower Hamlets was elected on an electoral commitment to look into changing the current Council Tax Reduction Scheme: “We will review the impact of the Council Tax Reduction Scheme and the support we provide to those in most need, including those affected by the government's implementation of Universal Credit.” (Tower Hamlets Labour Party Manifesto for the local elections of 2018). The IPPR Institute for Public Policy Research in March 2018 , published a paper, ‘A Poor Tax: Council Tax in London - Time for Reform’ which it established that the Council Tax in general is a regressive Tax, the poorer you are the more you pay in proportion to your income. Advisors in Benefit Advice Centres across the borough have noticed an increase in referrals of families who are finding it difficult to make ends meet, particular from ethnic minority background, in particular mini cab and delivery drivers: “Those who are hardest hit by the measure are mostly mini-cab drivers who are managing their living from hire purchase agreements on their cars in order to facilitate their self-employment status. They are usually working from local mini cab offices and complying with tough working terms and conditions, for example, Uber's rating conditions in which they are forced to keep above 4.5 star ratings from their customers in order to remain in trade with the company; otherwise they are barred from being on the list of its self-employed drivers. When Community Money Matters spoke to a number of ethnic cab drivers on Bethnal Green Road, this is what they said: 'We are not sure what are we to do. Our hours are unpredictable. On top of uncertainty of working hours, we now have to pay council tax in this borough. This clearly was not the case before. We are genuinely worried. We do need advice!” (Ripon Ray - Debt Advisor at Toynbee Hall). Tower Hamlets is the only borough in London that uses Minimum Income Floor in the calculation of self-employed claimants entitlement. The methods and manner currently adopted for discretionary reduction under section 13(A)(1)(c) of the Local Government Finance Act 1992, are humiliating and are complicated, acting as a barrier for residents who need help from applying.
This Petition ran from 12/04/2019 to 23/05/2019 and has now finished.
25 people signed this Petition.
Council response
Once a Local Council Tax Reduction Scheme (LCTRS) is set by a Local Authority at the beginning of the financial year, it stands throughout the whole year and changes can only be made from the start of the next tear following a full public consultation. Consequently as Tower Hamlets LCTRS has been set for 2019/2020, the scheme cannot be changed until April 2020. The current scheme does not remove full CTR for self-employed residents.
Entitlement is assessed by comparing income to a set of agreed allowances. If income is below the allowances full CTR is awarded based on 100% of CT liability. 20% of any income above the allowances is deducted from the Council Tax liability and the remainder is awarded as CTR. For residents who have been self-employed for more than 52 weeks, a notional income based on 35 hours per week at national minimum wage is used in the assessment instead of actual earnings. This means that if the residents actual self-employed earnings are less than the notional figure they are likely to lose some or all of their CTR entitlement.
Self Employed residents affected by this provision are offered
support which can include a referral to the Enterprise Team for
business advice and assistance with applying for a discretionary
decrease to their council tax liability in accordance with s13a of
the Local Government Finance Act 1992.
Tower Hamlets is not the only London borough to apply notional
earnings as a part of the assessment of CTR for self-employed
residents. Appendix 2 of the LCTRS report to Full Council listed
details of LCTR schemes within other London LA’s and at that
time LBTH were one of five London LA’s who use the Minimum
Income Floor (MIF) for self-employed working age households.
Page 69 on the link below refers:
http://democracy.towerhamlets.gov.uk/documents/g8872/Public%20reports%20pack%2023rd-Jan-2019%2019.00%20Council.pdf?T=10
Steve Hill
Head of Benefits Services