Tax help pulls up short: Councils have their own 'scheme' figures for calculating relief

THE PROMISE by the Government was to help people who would be paying far more in council tax this year than they had paid in the old community charge in 1992 - but the result does not seem to be as straightforward as that.

Nicholas Crace wrote to the Independent pointing out that his calculation of the deductions from his bill is quite different from that presented by his local council.

'I was in the council offices recently, for something completely different, when I picked up a leaflet on transitional relief,' he explains.

'Using this, I calculated that I should be receiving pounds 100.34 relief, rather than the pounds 52.66 I was actually receiving.

'Needless to say I was not very pleased to discover this discrepancy. If the Government makes a big thing saying it is going to limit the increase to a certain amount, then that is what it should do.'

Mr Crace, of Overton in Hampshire, comes under the borough of Basingstoke and Deane. He says that the calculation is a simple one. Increases are limited to a maximum amount for each property valuation band.

In his case (Band G), the maximum increase allowed is pounds 169. But his council tax this year is pounds 269.34 more than the poll tax that he and his wife paid last year.

Two months after he had written to the council about this, he received a reply. It explained, to his astonishment, that the council was basing its calculations on 'scheme' figures which are lower than the actual figures.

It stated: 'The scheme council tax figure is used for the purpose of calculating Transitional Reduction only. The resulting reduction is applied to the actual council tax figure.'

'But I pay the actual tax,' says Mr Crace, 'so I have not been protected from the increase as promised by the Government. It seems that it has introduced a new principle - that things are not what they are, but what the Government would like them to be. Do you think I could suggest to my Inspector of Taxes that, instead of being assessed tax on my 'actual' income, I should send him somewhat lower 'scheme' income figures?'

The council gives the following example, which applies to Mr Crace:

But Mr & Mrs Crace pay pounds 751.02 council tax. In 1992 they paid pounds 481.68 - leaving a difference of pounds 100.34 after the pounds 169 has been deducted.

The reason for this discrepancy, according to a spokesman from the Department of the Environment, is as follows: 'The point about council tax is that it is based on property, not people; and because houses do not move it should be easier to collect. Transitional relief is calculated on the assumption that council would collect 98 per cent of all council taxes. If their collection rate is less than this, then that will affect the figures.'

In a booklet put out by the DoE, The Transitional Reduction Scheme, which is meant to explain all this, a paragraph states: 'In certain circumstances, for instance, because of spending which the Government considers to be excessive or because your council has assumed a collection rate of less than 98 per cent, the figure for council tax used in calculations may be lower than the amount actually set. In such a case households will not be protected against the difference between the lowest figure and the actual council tax.'

Sean Langley, council tax manager of Basingstoke and Deane, said: 'The council tax reduction scheme is incredibly complicated and we have been in correspondence with our local MP and the DoE, saying that it is just impossible to explain to the general public exactly how it is worked out. We hardly understand it ourselves.

'We are not an overspending council, nor are we assuming a collection rate of less than 98 per cent, but government regulations state that we have to work out the reductions on a scheme basis. You will find some authorities working it out on actual figures but only because that is the lower figure.'

(Photograph omitted)