Summary: Miss X complained the Council is charging her council tax when she should have full Council Tax Reduction (CTR). We do not find the Council at fault for charging Miss X council tax. However, we find the Council at fault for its poor communication and handling of Miss X’s enquiries. This caused avoidable uncertainty and confusion. The Council has written off Miss X’s council tax bill for the two previous financial years, and this is a satisfactory remedy for most of the injustice caused. It has also agreed to apologise and provide a further explanation of Miss X’s council tax liability.

The complaint

1. Miss X says the Council is charging council tax when she should have a full council tax reduction.
2. She says this has had a significant impact on her mental wellbeing.

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The Ombudsman’s role and powers

3. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused significant injustice, or that could cause injustice to others in the future we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
4. The Valuation Tribunal deals with appeals against decisions on council tax liability and council tax support or reduction.
5. The law says we cannot normally investigate a complaint when someone has a right of appeal, reference or review to a tribunal about the same matter. However, we may decide to investigate if we consider it would be unreasonable to expect the person to use this right. (Local Government Act 1974, section 26(6)(a), as amended)
6. If we are satisfied with an organisation’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(1), as amended)

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How I considered this complaint

7. I considered evidence provided by Miss X and the Council as well as relevant law, policy and guidance.
8. Miss X and the Council had an opportunity to comment on my draft decision. I considered any comments before making a final decision.

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What I have and have not investigated

9. Miss X says she should be entitled to full CTR and therefore have no council tax liability. I have investigated the Council’s handling of Miss X’s council tax account, including how it considered her entitlement and responded to her enquiries and complaint.
10. I have not investigated the Council decision on Miss X’s entitlement to CTR itself. This is because decisions about entitlement to CTR carry a right of appeal to the Valuation Tribunal, and it is reasonable for Miss X to use that right.

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What I found

Legislation and guidance

Universal Credit

11. Universal Credit is a payment to help with living costs (including rent). It replaced housing benefit. The Department for Work and Pensions, which is not part of the Council manages Universal Credit. This means I cannot consider complaints about it. The Parliamentary and Health Service Ombudsman may decide to investigate complaint about DWP.

Housing Benefit

12. The Council manages and pays Housing Benefit which helps eligible people on low incomes pay their rent. Regulations set out the rules councils must follow for calculating and paying Housing Benefit. Usually, the Council pays the tenant housing benefit. The tenant is then responsible for paying the rent to their landlord.

Transitional Protection (TP) payments

13. Transitional protection payments are temporary top-up payments for people who moved from legacy benefits to Universal Credit via managed migration who would otherwise receive less money. They ensure a claimant’s income does not drop during the move.

Council tax reduction/support – ‘overpayments’

14. Council tax reduction (CTR, also known as council tax support) is a discount, not a benefit. It reduces the amount of council tax a person has to pay.
15. If a council gives someone too much CTR it can reduce the CTR and increase how much council tax the person owes. We call these changes ‘CTR reversals. Sometimes a council creates reversals because it has miscalculated the CTR. It might have ignored information it had or used information it should have not used.
16. If the council’s CTR Scheme says how it deals with challenges to reversals (sometimes called ‘overpayments’) a claimant can appeal to the Valuation Tribunal. If the scheme does not say how the council will deal with CTR reversals, the claimant cannot appeal.
17. Councils can decide to reduce someone’s council tax and should have a policy explaining when this happens. (S13A(1)(C) of the Local Government Finance Act 1992 as amended) If somebody is struggling financially because of a decision about wrongly paid council tax reduction, they can apply for a discretionary reduction. Appeals about those decisions are to the Valuation Tribunal.

Council tax – discretion to write off or make discretionary payment

18. In exceptional circumstances, the law says councils can decide not to collect some or all a council tax debt. (S13A(1)(c) of the Local Government Finance Act 1992 (as amended))

Why appeal to the Tribunal?

19. The tribunal is an independent expert body. The Council must do what the tribunal tells it to. The complainant could appeal to the tribunal in this case.

What happened

20. Before October 2024, Miss X received the maximum level of Council Tax Reduction (CTR) and paid zero council tax.
21. In October 2024, Miss X migrated from housing benefit to Universal Credit (UC) as directed by Department for Work and Pensions (DWP).
22. Following this, the Council reassessed her CTR entitlement using income information provided by the DWP. It then issued council tax bills showing Miss X had to contribute towards her council tax. It required a payment of £206 by December 2024.
23. Miss X contacted the Council several times in late 2024 questioning why she was now liable to pay council tax. She said her income had not changed and asked the Council to explain the decision.
24. In November, Miss X made a £20 contribution to the bill. She then made a further payment of £100 in December. She says she made this payment due to receiving further bills and based on advice from a representative supporting her.
25. In January 2025, the Council emailed Miss X saying it had adjusted her CTR claim, and a formal decision letter would follow. It said she could ask for a review if she did not agree with the decision.
26. The Council emailed Miss X providing a breakdown of how her CTR was calculated, based on figures supplied by the DWP. It said she was expected to contribute towards her council tax based on her income.
27. Miss X responded to this email. She thanked the Council for explaining how council tax is worked out. However, she said on housing benefit it was her average monthly income that was used, which is not being used now she is claiming Universal Credit.
28. In March 2025, Miss X escalated her concerns to senior Council officers, and a support organisation. She said she had received multiple bills, had provided evidence of her income, and had not received clear explanations or a decision letter.
29. Following this, the Council reviewed Miss X’s account. It identified a possible issue with the software used to calculate CTR and began investigating whether this had affected her entitlement.
30. In April, the Council placed a hold on recovery action on Miss X’s account while it investigated the issue with its system and informed Miss X.
31. The Council continued to investigate the issue over the following months, including contacting its software provider. During this time, Miss X did not receive a clear explanation of her liability.
32. In July, Miss X bought her complaint to the Ombudsman.
33. Miss X contacted the Council again in August after receiving another council tax bill. She asked whether she should continue making payments or whether the hold on recovery action remained in place.
34. The Council informed Miss X the hold on her account had been extended to November 2025. It told her the team were still requesting updates relating to the software issue and stated that given the ongoing delay, it would be recommending to the complaints team it consider compensation.

Council response to enquiries

35. The Council said that when Miss X moved to UC in October 2024, it reassessed her CTR using the income provided by DWP. It said this changed the amount used in the calculation, which was lower than under the previous Housing Benefit system. As a result, her income was above this amount, and she became liable to pay towards her council tax.
36. The Council explained the £120 Miss X had previously paid was not shown on the bill because it related to the previous financial year.
37. The Council also identified a software error in its benefits system which affected Miss X’s CTR calculation for a short period between October and November 2024. The error reduced her CTR by £0.59 per week, causing a total financial loss of £2.35.
38. During the 2024/25 CTR period, Miss X was awarded £1,391 reduction, but this was incorrect. She should have received £1,374 CTR, meaning she was overpaid by £16.57 overall.
39. The Council explained when notifications were first being loaded into the benefit service system, the Transitional Protection (TP) payments were being included as income in the CTR calculation, resulting in less entitlement for customers. It said this error had a minimal impact on Miss X’s entitlement.
40. The Council accepted there were faults in how it handled Miss X’s contacts. It said:
• It did not clearly explain why her CTR had changed,
• Officers had given incorrect or unclear information while trying to assist,
• There were delays in resolving the issue, and
• It placed inappropriate holds on recovery action which may have caused confusion for Miss X.
41. The Council told us it has since written off Miss X’s council tax bill for 2024/25 and 2025/26 to recognise the delay and distress she has experienced because of its fault.

What I found

System error

42. The Council identified a software error affecting its CTR calculations for four weeks between October and November 2024. This was fault. However the resulting financial injustice to Miss X was limited, and the Council has since written off her council tax bill, which remedies the impact of this error. The error was also not the main cause of the wider issues she experienced.
43. The Council said it fixed the system error in February 2025 by amending the system parameters so that TP was no longer treated as income. It also expects to introduce further system changes by April 2026, so that TP is included within the applicable amount, reducing the risk of similar issues arising.

Council Tax Reduction (CTR) entitlement

44. The Council is responsible for assessing entitlement to CTR based on the information it receives, including information provided by the DWP.
45. Before October 2024, Miss X received the maximum CTR. This was because her entitlement was assessed using housing benefit figures, which included additional disability premiums in the calculation of her applicable amount. As her income was below this amount, her council tax was fully covered.
46. Under UC, the applicable amount used to calculate CTR no longer includes the same disability premiums. This reduced Miss X’s applicable amount. As a result, her income was higher than the threshold used in the calculation and she became liable to pay towards her council tax.
47. Miss X queried why average earnings were no longer used in the calculation of her CTR. Under Housing Benefit, entitlement could be based on averaged income figures. However, under Universal Credit, the Council receives income information directly from DWP through automated data feeds, which reflect actual monthly earnings rather than averaged amounts. The Council must use this information when calculating CTR and cannot substitute it with averaged figures.
48. If Miss X believed the income figure provided by DWP was incorrect, she would need to raise this with DWP. The Council did not clearly explain this to Miss X when responding to her query, which contributed to her confusion. This was fault.

Enquiry handling

49. Miss X contacted the Council several times to query her liability and to request an explanation. She also raised concerns that she had not received a decision letter.
50. The Council accepted it did not clearly explain why Miss X’s CTR had changed and failed to respond properly to some of her emails. It also accepted that officers gave unclear or incorrect information while trying to assist.
51. When Miss X escalated her concerns in March 2025, the Council focused on a potential system error rather than explaining the change in her entitlement. This created the impression the calculation was incorrect when, in fact, the main reason for the change was her move to UC.
52. The Council then spent several months investigating the potential system issue, including contacting its software provider. During this time, the Council did not provide Miss X with a clear or timely explanation of her liability.
53. I find the Council was at fault for how it communicated with Miss X and how it handled her enquiries. This fault caused her significant avoidable confusion and uncertainty.
54. The Council has acknowledged its failings and has acted. It has written off Miss X’s outstanding council tax balance for the 2024/25 and 2025/26 financial years and reset her account balance to nil. This goes beyond the level of remedy I would normally recommend, as it removes a significant outstanding financial liability rather than simply recognising the distress caused.

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Action

55. To remedy the injustice caused by the faults above, within four weeks from the date of my final decision, the Council will:
• apologise to Miss X in line with our guidance Making an effective apology; and
• provide Miss X with a clear explanation of how her council tax liability has been calculated. This should include appropriately signposting her to her appeal rights and advise her she needs to contact the benefits office that assessed her Universal Credit regarding her income.

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Decision

56. I find fault causing injustice. The Council has already acted, and it has agreed further actions to remedy injustice.

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Investigator's decision on behalf of the Ombudsman