A new report from the Institute for Policy Research (IPR), titled ‘Council Tax Reduction and Universal Credit’, warns that not all Universal Credit (UC) claimants will receive a Department for Work and Pensions (DWP) perk. The report highlights a postcode lottery for council tax support in the UK, creating “winners” and “losers” among low-earning households.
Key Findings of the Report
The IPR report explores how low-earning households in England experience and respond to Council Tax Reduction (CTR), a means-tested discount on council tax for eligible, low-income, working-age people. In 2025-26, there were 313 separate CTR schemes across England, each with its own eligibility and entitlement rules. Virtually all working-age people receiving CTR are now UC claimants, but not all UC claimants receive CTR. Claimants who work are much less likely to qualify for help.
Research Methodology
Funded by the Aberdeen Group Charitable Trust, the research included an online survey of 160 UC claimants in paid work or self-employment, telephone interviews with 30 survey respondents currently or recently receiving CTR, and video interviews with five key informants, such as local authority officers and specialist advice agencies.
Proposed Changes
The think tank suggests several changes, including a nationally designed system administered by local authorities or integrating council tax support within Universal Credit. Dr. Rita Griffiths, a Research Fellow at IPR and lead author, stated: “Our research shows that people with similar earnings and household circumstances can receive very different levels of help with council tax depending purely on where they live. Sharp cut-off points in support as income rises can also mean some people are worse off after starting a job or working longer hours. This can undermine work incentives and raises questions about consistency and fairness.”
Dr. Marsha Wood, a Research Associate at IPR and co-author, added: “For some working households, higher earnings do not necessarily translate into better financial outcomes if council tax support reduces as a consequence. This highlights the importance of looking at how different parts of the system interact.”
