Council Tax Reduction Wales Income Limit and Savings Rules

There is no single income limit that decides whether you get Council Tax Reduction in Wales. Instead, the council compares your weekly income against a personal threshold called the "applicable amount." The gap between the two determines your award — and the 20% taper means even moderate earners can still qualify.

How the Means Test Works

The calculation runs in five steps, done weekly:

1. Work out your eligible council tax liability — your annual bill (after any discounts like the 25% single person discount) divided by 52.
2. Set your applicable amount — a threshold based on your household structure (details below).
3. Calculate your countable income — earned and unearned income after statutory disregards.
4. Find the excess — income minus applicable amount. If the result is zero or negative, you get the maximum reduction.
5. Apply the 20% taper — multiply the excess by 0.20. Subtract this from your eligible liability, then subtract any non-dependant deductions.

The result is your weekly CTR award.

2026/27 Applicable Amounts

Your applicable amount is not a hard income limit — it is the personal allowance figure the means test uses. The higher your applicable amount (because of children, disability premiums, or carer status), the more income you can earn before the taper bites.

Working-age rates:

• Single person under 25: £80.60/week
• Single person 25 or over: £101.85/week
• Lone parent: £101.85/week
• Couple (both under pension age): £159.85/week
• Each dependent child: £87.88/week added
• Family premium: £19.48/week
• Disability premium (single): £33.99/week
• Severe disability premium: £86.05/week (or £172.10 for a couple both qualifying)
• Carer premium: £48.15/week

Pension-age rates:

• Single pensioner: £256.00/week
• Pensioner couple: £383.35/week
• Each dependent child: £87.88/week added

These premiums stack. A lone parent with a disabled child receiving the carer premium has a much higher applicable amount than a single person — and therefore keeps more income before the taper kicks in.

The 20% Taper Explained

Wales uses a 20% taper rate. For every £1 of income above your applicable amount, your CTR is reduced by 20p. This is significantly gentler than the income tapers in Universal Credit (55%) or the old council tax benefit (20%, but English councils now set their own, often harsher, schemes).

Example: A single person aged 30 in Cardiff earns £141.85/week net after tax and NI. After the £5/week standard earnings disregard, countable income is £136.85. Against an applicable amount of £101.85/week, excess income is £35/week. Taper deduction: £35 × 0.20 = £7/week. If eligible weekly liability is £20.19, the CTR award is £20.19 − £7.00 = £13.19/week.

If your income is at or below your applicable amount, the taper is zero and you receive the maximum — 100% of your eligible council tax, less any non-dependant deductions.

Capital and Savings Limits

Working-age claimants:

• Below £6,000: savings ignored completely
• £6,000 to £16,000: tariff income of £1/week per £250 (or part thereof) is added to your countable income
• Above £16,000: you cannot claim CTR at all

Pension-age claimants (without Pension Credit Guarantee Credit):

• Below £10,000: savings ignored
• £10,000 to £16,000: tariff income of £1/week per £500
• Above £16,000: excluded

Pension Credit Guarantee Credit recipients: no capital limit. Savings are entirely disregarded.

Capital includes bank accounts, ISAs, shares, and property other than your home. It does not include the value of your main residence, personal possessions, or the surrender value of a life insurance policy.

Certain lump-sum payments are disregarded — Post Office Horizon compensation, Windrush compensation, and several other statutory schemes are excluded for 52 weeks or indefinitely.

Earnings Disregards

Before the taper calculation, the council subtracts standard disregards from your net earnings:

• Single person: £5/week
• Couple: £10/week
• Lone parent: £25/week
• Disability or carer category: £20/week
• Additional disregard for working 30+ hours (or 16+ with a child/disability): £17.10/week

Disability benefits (PIP, DLA, Attendance Allowance) are fully disregarded — they are not counted as income. Child Benefit and child maintenance are also disregarded.

Can You Get 100% Reduction?

Yes. If your income is at or below your applicable amount and you have no non-dependant deductions, you receive a 100% reduction. The Welsh scheme requires every council to offer up to 100% for both working-age and pension-age claimants — no council in Wales can impose an 80% or 90% cap.

Passported benefit recipients (Pension Credit Guarantee Credit, Income Support, income-based JSA, income-related ESA) automatically receive the maximum reduction.

The Council Tax Reduction in Wales guide includes a CTR calculation worksheet so you can run the numbers before you apply — along with evidence checklists and a claim tracking log for the full application process.

See more Wales guides →