The Labour Party government has announced a significant update to the rules governing council tax reductions, introducing five key changes designed to widen access and provide more financial support to eligible households across Great Britain.
New Financial Disregards for Specific Payments
The core of the regulatory shake-up involves introducing new "disregards" for certain types of income. This means that receiving these specific payments will no longer affect a person's entitlement to a council tax reduction.
The first new disregard applies to payments from the Armed Forces Lesbian, Gay, Bisexual and Transgender Veterans Financial Recognition Scheme. Veterans receiving this financial recognition will not see their council tax support impacted as a result.
A second disregard has been added for Miscarriage of Justice Compensation payments administered by the Ministry of Justice. This ensures that individuals compensated for wrongful conviction can receive this support without it counting against their council tax reduction claim.
The third change concerns the Adult Disability Allowance (ADA) payments made under Scottish regulations. For individuals who move from Scotland to England, any ADA payments received during a transitional period will be disregarded when assessing their entitlement to a council tax reduction in England.
Easier Access During International Crises
The regulations also include two important measures to support British nationals affected by crises abroad.
For individuals in a country where the UK government has advised British nationals to leave or arranged an evacuation, the habitual residence test will be waived for up to six months. This applies to both working-age and pension-age claimants, making it easier for them to claim a council tax reduction upon their return or during their absence.
Support for Temporary Absences
Furthermore, pension-age claimants who are normally resident in Great Britain can now be temporarily absent from their home for up to 26 weeks and still receive council tax reduction support. This offers greater flexibility for those who may need to spend extended periods away, for example, providing care for a family member.
Government Guidance and Implementation
The changes, which were signed off by the Local Taxation and Pensions Division of the Ministry of Housing, Communities and Local Government, came into effect on 19 January 2026.
The government stated that the amendments are consistent with the wider benefits system, ensuring that a pension-age person's claim is protected from being affected by the receipt of the newly specified payments.
For any queries regarding these new regulations, the government has directed the public to contact the Department at: council.tax@communities.gov.uk.
