Scotland and Wales working-age council tax reduction ignores the Universal Credit rules, child amounts and the benefit passport

[MaxGhenis]

Simulated council tax reduction (CTR) is far below reported CTR for working-age households in Scotland and Wales. On main (44240bd), with the Enhanced FRS 2024-25, in 2026:

Group	Simulated	FRS-reported	Official
Scotland, working age	£0.046bn (0.059m)	£0.134bn (0.342m)	about £0.276bn and 307k recipients*
Wales, working age	£0.000bn (0.001m)	£0.067bn (0.107m)	157k households (March 2026)

* Scotland does not publish spending by age. £0.276bn is the under-65 share of the £425.1m provisional 2025-26 income forgone, estimated from the March 2026 average awards by age.

Sources: Council Tax Reduction in Scotland, 2025-26; Council Tax Reduction Scheme: annual report 2025 to 2026.

Causes in the model

The national formula (simulated_council_tax_reduction_benunit) gives working-age Scottish and Welsh claimants the pension-age means test, built on Housing Benefit parameters.

1. Universal Credit. The whole UC award, including the housing costs element, counts as income against a Housing Benefit personal allowance. The law is different in each country:
   • Wales (WSI 2013/3029 Sch 6 paras 3 and 9) compares the Secretary of State's UC income plus the award with the UC maximum amount. The housing and child elements therefore cancel, and a UC claimant with no earnings gets the maximum reduction.
   • Scotland (SSI 2021/249 regs 35, 42 and 57(1)(p), (2)(d)) keeps its own applicable amount. The only UC it counts as income is the child element (with disabled-child additions) plus the childcare costs element, capped at the award.
2. No IS, income-based JSA or income-related ESA passport (SSI 2021/249 reg 13(11); WSI 2013/3029 Sch 9 and Sch 10 para 8). This is Scotland and Wales working-age council tax reduction do not passport income support, income-based JSA and income-related ESA #1935.
3. Applicable amounts. There are no child amounts: Scotland pays £109.85 per child, Wales £87.88. The Welsh family premium (£20.22) is missing. Welsh working-age personal allowances are higher than Housing Benefit's: £101.85, £80.60 and £159.85, against £95.55, £75.65 and £150.15.
4. Income.
   • Child Benefit is counted, though both countries disregard it.
   • There are no earnings disregards (£5, £10, £20 or £25, plus £17.10), no childcare deduction and no tariff income.
   • Actual interest, dividends and rent are counted, where the law treats them as capital.

Causes in the data (policyengine-uk-data)

These are to be filed there and are not fixed by the model change:

• The FRS 2024-25 CTANNUAL is "Annual CT amount after discounts/reduction". uk-data copies it into council_tax, which the model treats as the gross liability, so every reported recipient's bill is already net of its own CTR. 41.5% of Welsh working-age reported recipients have a £0 bill.
• SPI-synthetic rows carry imputed "reported" CTR from the stage-2 QRF.
• FRS-reported amounts average about a third to a half of the admin average award, so they are not a spending benchmark.

Fix

A PR follows. It gives Scotland's working-age scheme and the Welsh rules for persons who are not pensioners their own route in the national formula: the UC rules, the passport, devolved applicable amounts with their full 2013-2026 history, and income as the law defines it. Pension-age CTR is unchanged.