How Housing Benefit and Council Tax Reduction are calculated and paid

Housing and council tax benefitsThe benefit calculation

In most cases if a claimant is in receipt of Income Support, income based Jobseekers Allowance or the Guaranteed Element of Pension Credit they will be entitled to Housing Benefit and / or Council Tax Reduction minus any non-dependant deduction. For other incomes the calculation is much more complex.

Housing Benefit and Council Tax Reduction is calculated using what is known as the Applicable Amount.  This is how much a person needs to live on per week depending on their circumstances, for example, the number of people in their household, their age etc.  For every £1 that a person's income exceeds their Applicable Amount, 65 pence is deducted from the maximum Housing Benefit entitlement for that week and 20 pence is deducted from the maximum Council Tax Reduction entitlement for that week.  The resulting sum is the amount of benefit / reduction that the person will receive, providing there is no requirement for a non-dependant deduction to be made. Please follow this link to the Housing and Council Tax Benefit calculator if you would like an estimate of your Housing and Council Tax Reduction entitlement.

Your rent may be restricted

The rent eligible for Housing Benefit is not always the same as the rent being charged for the property and therefore, even if the claimant is in receipt of Income Support or has a low wage, there is no guarantee that all the rent will be met by Housing Benefit. Where the full rent cannot be met by Housing Benefit, the tenant is responsible for paying the difference to the landlord. In some cases rents charged by landlords are referred to the The Rent Service.

Local Housing Allowance

The Local Housing Allowance (LHA) is used to calculate Housing Benefit for people living in the private rented sector and affects the way benefit is worked out and how it is paid.

Tenants living in the following types of accommodation are not affected by the scheme:

  • Tenancies provided by a registered social landlord (housing associations)
  • Supported tenancies provided by certain authorities, social landlords, charities and voluntary organisations
  • Tenancies which commenced prior to 15 January 1989
  • Hostels
  • Caravans, houseboats and mobile homes
  • Tenancies where the rent officer judges that a large part of the rent is for board and attendance.

The Local Housing Allowance is based on rent levels for the area in which a person lives and the number of people living with them.  The Local Housing Allowance rates are decided by the rent officer and are published by the Council so that new claimants and claimants moving house will know in advance the rate of Local Housing Allowance on which their benefit will be based. 

In most cases the Local Housing Allowance is paid to the tenant, usually into a bank account and you can get advice about opening a bank account from any bank or building society. However, where the tenant can prove that they will struggle with the responsibility of making rent payments to their landlord, the Council will help the tenant to make other arrangements.

For confirmation of the maximum amount of Local Housing Allowance that you can receive in your area, please see visit the LHA website.

If you have any further queries please contact the Council's Benefit Section on the number shown.

Changes to Housing Benefit from 1 April 2013

There are changes to the calculation of Housing Benefit in respect of properties let by social landlords from 1 April 2013. This relates to the under-occupancy of a property. Please see details in the document at the bottom of the screen.

How capital affects your benefit entitlement

Generally speaking you will not be entitled to benefit if you have savings over £16,000, unless you are in receipt of the Guaranteed Element of Pension Credit.

If you are have not yet reached the qualifying age for state pension credit, £1 will be added to your weekly household income for every £250 that your capital exceeds £6,000. If you are have attained the qualifying age for state pension credit, £1 will be added to your weekly household income but only for every £500 that your capital exceeds £10,000.

How Housing Benefit is paid

Payments of Housing Benefit are normallly made every four weeks in arrears. Where tenants request that payments are sent direct to the landlord, the Council will issue notification letters to the landlord informing them of their tenant's benefit entitlement. Payment is made by electronic transfer. Where entitlement cannot be determined and the claimant has provided all information that they are required to, a payment on account can be made.  Any shortfall between the rental charge and the Housing Benefit award should be paid by the tenant.

How Local Housing Allowance is paid

Local Housing Allowance is paid four weekly in arrears. In most cases Local Housing Allowance will be paid by BACS directly into a tenant's bank or building society account, however in cases where a tenant can prove that they would struggle with the responsibility of paying their rent the Council can help to make other arrangements.

How Council Tax Reduction is paid

Council Tax reduction is paid by crediting the Council Tax account with the reduction for the year, a Council Tax Demand (bill) is then issued showing any sum due.

Important notes

Neither tenant or landlord should make any assumptions about whether housing benefit will be awarded, or the amount that might be paid.  Only an official notification letter will confirm entitlement.

The Council is committed to making sure that only claimants entitled to benefit actually receive a payment.  Benefit will therefore only be paid where the Council is satisfied of the validity of the claim. Details of claims are confidential. The Council is limited in the amount of information it can disclose to third parties such as landlords.

Other money you may be entitled to

For information on other money that you may be entitled to please visit

Turn2us is an organisation that helps people in financial need maximise their income by accessing the money available to them through welfare benefits, grants and other financial aid.

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0303 123 1702

Allerdale Borough Council
Allerdale House, Workington, Cumbria,
CA14 3YJ