Council Tax Reduction Tariff Income — How Savings Between £10,000 and £16,000 Affect Your Award
What Tariff Income Is
Tariff income is a notional weekly income the council adds to your real income when you have savings between £10,000 and £16,000. It doesn't represent actual earnings or interest — it's a formula the government prescribes to reduce council tax reduction gradually as savings increase, rather than cutting it off at a cliff edge.
For pensioners, the rate is £1 per week for every £500 (or part of £500) above £10,000. That "or part thereof" matters: £10,001 in savings generates the same £1 per week tariff income as £10,500.
The Calculation Step by Step
- Take your total non-disregarded capital (savings, investments, second property equity — but not your home or undrawn pension pots)
- Subtract £10,000
- Divide the remainder by £500
- Round up to the next whole number
- That's your weekly tariff income in pounds
Example: You have £13,200 in savings.
- £13,200 − £10,000 = £3,200
- £3,200 ÷ £500 = 6.4
- Round up to 7
- Tariff income = £7 per week
That £7 is added to your actual weekly income (pensions, earnings, benefits counted as income) before the council runs the means test. If the combined figure is still at or below your applicable amount, the tariff income has no effect on your award.
How Much Tariff Income Actually Costs You
The tariff income feeds into the 20% taper. If the £7 tariff income is the amount that pushes your total income above the applicable amount, it reduces your weekly council tax reduction by 20% of £7 = £1.40 per week, or about £73 per year.
Here's the full range:
| Savings | Tariff income | Maximum annual cost to your CTR |
|---|---|---|
| £10,001–£10,500 | £1/week | £10.40 |
| £11,000 | £2/week | £20.80 |
| £12,000 | £4/week | £41.60 |
| £13,000 | £6/week | £62.40 |
| £14,000 | £8/week | £83.20 |
| £15,000 | £10/week | £104.00 |
| £16,000 | £12/week | £124.80 |
| Over £16,000 | N/A — disqualified | Full council tax bill |
The "maximum annual cost" column assumes the tariff income is entirely excess above the applicable amount and is subject to the full 20% taper. In many cases the actual cost is lower — because other income is below the applicable amount, absorbing some or all of the tariff income before the taper kicks in.
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Why the Pension-Age Rate Is More Generous
Working-age council tax reduction schemes in some councils use a tariff income rate of £1 per £250 — twice the pension-age rate. A working-age applicant with £13,200 in savings would have £12.80 per week in tariff income, not £7. The pension-age scheme's £1 per £500 rate is set nationally and can't be made harsher by your local council.
Guarantee Credit Overrides Everything
If you receive Pension Credit Guarantee Credit, the council disregards all your capital. No tariff income is calculated. You receive maximum council tax reduction regardless of how much you have in savings. The tariff income rules only apply to pensioners who don't receive Guarantee Credit.
For a printable worksheet that calculates your exact tariff income and shows its impact on your council tax reduction, see the Pensioner Council Tax Reduction Claim Guide.
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