The Hardship Fund, which was announced by the Chancellor at Budget, will go to local authorities in England to enable them to reduce the 2020 to 2021 council tax bills of working-age people receiving Local Council Tax Support.
Guidance released on 24 March 2020 by the Ministry for Housing, Communities and Local Government provides clarity for councils on how to allocate the funding following its announcement at Budget.
The guidance is intended to support billing authorities in using their allocation from the £500m hardship fund announced at the Budget. The guidance which applies to England only outlines the underpinning principles for use of the fund and expected eligibility criteria for delivery of the support package.
Importantly, whether or not a taxpayer has been affected by COVID-19, directly or indirectly, should not be taken into account in assessing eligibility for this reduction.
The guidance states that Government’s strong expectation is that billing authorities will provide all recipients of working age local council tax support (‘LCTS’) during the financial year 2020-21 with a further reduction in their annual council tax bill of £150. Where a taxpayer’s liability for 2020-21 is, following the application of council tax support, less than £150, then their liability would be reduced to nil.
The Government recognises that COVID-19 is likely to cause fluctuations in household incomes and recognises that, as a result, some individuals may struggle to meet council tax payments. Councils will already have established their local council tax support schemes for 2020-21. The Government, therefore, expects that billing authorities will primarily use their grant allocation to reduce the council tax liability of individuals in their area.
Councils will also be able to use the funding to provide further discretionary support to vulnerable people through other support arrangements such as Local Welfare Schemes.