How housing benefit and council tax support are calculated

The more income you have, the less benefit you get.  The Government sets the minimum amount that you need to live on each year.  This is called the applicable amount.  If your income is more than your applicable amount, you will get less housing benefit and council tax support.

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Use our benefit calculator to see if you’re entitled to housing benefit or council tax support.

Your applicable amount is the minimum the Government says you and your family need to live on.

It’s made up of:

  • Personal allowance
  • Dependants allowance
  • Premiums

Personal allowance

Your applicable amount will always include a personal allowance.  There are different amounts of personal allowance based on your age and whether you are single, married, living together as a couple or a lone parent.

Dependants allowance

If you’re looking after children (other than foster children), your applicable amount will include an allowance for each child.  The allowance continues as long as you get child benefit for the child. From 6 April 2017 for new claims or change of circumstances the Housing Benefit applicable amount is restricted up to a maximum of two children, unless you have a Child Tax Credit award notice which specifies more than two children have been included in the Child Tax Credit decision. The restriction will only apply to Housing benefit claims, and not Council Tax Support claims.

Premiums

Your applicable amount may include a premium for:

  • Having a disability
  • Being of pensionable age
  • Caring for someone
  • Being a family

Your housing benefit will be reduced by 65% of any income over your applicable amount.  Your council tax support will be reduced by 20% of any income over your applicable amount.

If you live with your partner, your housing benefit and council tax support will be based on your joint income and capital.  This also applies to couples in a civil partnership.

Income and earnings

Income is all the money you receive in one week.  This includes earnings, pensions, tax credits, other benefits and an assumed income from savings.

If you receive pension credits (either guaranteed or savings credit) and have told the Pension Service you are claiming housing benefit and council tax support, they will tell us how much income you are receiving.  Some benefits are completely ignored, such as attendance allowance and disability living allowance. 

Earnings include money you receive from employment and self employment.  We take off income tax, national insurance and half of any pension contributions you pay.  We can also ignore at least £5 of your earnings. 

Your benefit will not be reduced if you’re on income support or income based jobseeker’s allowance or employment and support allowance (income related).  This is because the amount of benefit you get is the same as your applicable amount. 

Capital

Capital is all your savings, investments and the value of any property or land you own but don’t live in.

If you are of working age and have £6,000 or more you won’t get council tax support. If you have £16,000 or more you won’t get housing benefit.

If you are of working age, any savings you have under £6,000 will be ignored when we assess your claim. If you have savings between £6,000 and £16,000 each £250 (or part of £250) will count as producing £1 income a week. 

If you are of pensionable age, any savings you have under £10,000 will be ignored when we look at your claim. If you have savings between £10,000 and £16,000 each £500 (or part of £500) will count as producing £1 income a week.

If you are of pension age and have £16,000 or more you will only get housing benefit or council tax support if you are receiving guaranteed pension credit.

If you think your benefit hasn’t been calculated correctly, see our benefit appeals page.