Council Tax Reduction - minimum local residence rule

Last updated: July 30, 2014

(AA and others) v Sandwell Metropolitan Borough Council CO/633/2014

Council tax reduction – minimum local residence rule

CPAG has won a test case on behalf of three vulnerable women in financial need who were charged a higher rate of council tax by their local authority simply because they only recently moved into the area.  The judicial review case is one of the first test cases on the extent of local authority’s powers and duties in setting up council tax reduction schemes.  

Until 2013, people on low income used to be able to claim help with paying their council tax through council tax benefit.  In April 2013, the Government abolished council tax benefit and replaced it with local schemes set up and run by local authorities.  Each local authority must introduce a scheme specifying reductions in council tax for residents who are in financial need. 

When Sandwell Council introduced its scheme, it included a rule, without prior consultation, excluding anyone from claiming a reduction in their council tax who has not lived in the borough continuously for the last two years.  As a result, anyone who had recently moved into Sandwell borough had to pay the full rate of council tax regardless of their income or ability to pay.

The Claimants are three vulnerable women who were living in a neighbouring borough, but lost their homes and had to move into Sandwell for compelling reasons.   One left to escape domestic violence; another had to move following a bereavement; and the third was hospitalised after attempting suicide.  Two of the women were originally born in Sandwell and have close relatives living there.  They were all refused a reduction because they did not meet Sandwell’s two year residency rule and were required to pay the full rate of council tax, which they could not afford to pay.  One of the Claimants was threatened with bailiffs.

CPAG argued that the two year residency rule in Sandwell’s council tax reduction scheme is unlawful under the Local Government and Finance Act 1992 and under anti-discrimination laws and that Sandwell Council failed to consult properly or comply with its equality duties.

The case was heard in the High Court in Birmingham on 22 July 2014 and the judgment was handed down on 30 July 2014.

The High Court struck down Sandwell Council's policy of refusing a council tax reduction to anyone who had not lived in the area for at least two years. In a judgment highly critical of the Council, Mr Justice Hickinbottom ruled that the two year residency rule was unlawful on six separate grounds. The Council acted outside its statutory powers, the two year rule is irrational and discriminates on grounds of race and gender and the Council failed to hold any consultation or comply with its equality duties. Following the judgment two other Councils which had adopted minimum local residency rules (Tendring and Basildon) have stopped applying them. 

Sandwell have not appealed against the judgment.