Help with paying for rates

Siobhán Harding of Citizens Advice explains help available to ratepayers on low income and those most affected by the reform of domestic rates.

Introduction

From 1 April 2007, the way in which domestic rates are calculated in Northern Ireland will change. A domestic property will, from this date, no longer be assessed for rates on its rental value but on the capital value of the property. The capital value of a property is defined as ’the amount which the property might reasonably have been expected to sell for on the open market on 1 January 2005.’

With the reform of domestic rates comes a new package of relief schemes available to people on low incomes and those most adversely affected by the new capital system of domestic rating. There is a lack of knowledge among certain groups of ratepayers, for example elderly owner-occupiers, of the existing help available with rates bills and so an effective communication and take-up campaign will be a key to the success of the new relief schemes. People on low incomes will be able to continue to claim Housing Benefit to cover all or part of their rates bill. Housing Benefit for rates is available to non owner-occupiers and owner-occupiers depending on their circumstances. Under the new system of rating, claiming this benefit will take on a new level of importance as it acts as a key ’passport‘ benefit to help with water charges also to be introduced from April 2007.

New relief schemes

1. For those most affected by the move to the new system, a transitional relief scheme will be introduced for ratepayers who experience a large increase in their rates bill. Transitional relief will be given if a property’s rates bill under the new system is 33% or more higher than it would have been under the old system. This scheme will run over a three year period. In the first year of the transitional relief scheme, the level of relief will be 100% on the amount above the 33% increase. In the second year, the level of relief will be 66% and in the last year the level of relief will be one third of the amount above the 33% increase.

2. Also from April 2007, a new rate relief scheme will be introduced to help those on low incomes who are just above the existing Housing Benefit threshold or who are not getting full Housing Benefit. Under the Housing Benefit system, the amount of help with rates that a client will receive is decided by the level of excess income (excess income is the difference between the income and the applicable amount for a household. The applicable amount is the amount that the household is expected to live on each week). Under the new rate relief scheme, the amount of excess income which is to be taken into account will be reduced from 20% to 12%. Entitlement to this new rate relief scheme will also act as a passport to help with water charges.

3. Full relief from rates will be given for properties occupied solely by those in full time training and education, sixteen and seventeen year olds and young people leaving care. An exemption from rates will also be awarded to university halls of residence.

4. Disabled Person’s Allowance is a reduction in the rates payable on a domestic property that has been specially adapted for the benefit of a person with disabilities who lives there. From April 2007, a standard 25% reduction in the rates charged will be awarded to eligible households. If a person currently qualifies for a reduction in their rates bill because someone in the household has a disability and the reduction was more than 25%, then after April 2007 if their circumstances remain unchanged, they will keep their present reduction. Where the reduction was less than 25%, the standard 25% reduction will be applied from April 2007.

Challenging decisions

During the summer of 2006, all households in Northern Ireland received a valuation notification letter from the VLA which contains information about the 2005 capital value of the property and other specific property details, for example, if the property has a garage or not. If any of the information about the property is wrong or the householder disagrees with the capital value, they should contact the VLA. Once the new arrangements are introduced there will be new appeal rights for ratepayers.