Thousands in financial hardship may be unaware of their entitlement to Council Tax Support. A new report warns over £3 billion in local tax relief is going unclaimed, raising concerns about benefit visibility and accessibility.
A new analysis has revealed that more than 2 million households across the UK are missing out on Council Tax Support (CTS) — a local scheme designed to ease the financial burden for low-income residents. The findings are part of the latest Missing Out 2025 report published by Policy in Practice, which sheds light on how much support remains untapped across various welfare schemes.
Council Tax Support Remains the Most Underclaimed Local Benefit
According to Policy in Practice, Council Tax Support tops the list of the most underclaimed means-tested benefits in the UK. Despite being in place since its devolution to local councils in 2013, CTS still fails to reach a large proportion of those eligible. The report estimates that 2.51 million households are currently missing out on the scheme, with over £3 billion in potential aid left unclaimed.
The situation appears to be worsening: compared to last year’s figures, the number of households not claiming support has grown by 14%, although the total monetary value of unclaimed support dropped by 3%. Council Tax Support is available to people on low incomes, including those receiving Universal Credit, but its complexity, combined with regional variation in rules, often deters potential applicants.
The report identifies several reasons behind the high level of unclaimed support, including limited awareness, system complexity, and stigma associated with claiming benefits. It notes that some people choose not to apply because the effort involved may seem disproportionate to the amount offered — particularly when benefit levels are low. It also highlights that many working-age adults receive less Council Tax Support than pensioners, which may further discourage claims.
Awareness, Stigma and Benefit Design Blamed for Low Uptake
The Missing Out 2025 report doesn’t just identify the problem — it also outlines possible reasons. Chief among them is a lack of public awareness. Many residents simply don’t know that Council Tax discounts exist or mistakenly assume they won’t qualify. For those receiving Universal Credit, for instance, the housing element covers rent but does not apply to Council Tax, which must be claimed separately.
In addition to awareness issues, the design of the benefits system itself is highlighted as a barrier. Means-testing, savings thresholds, and the complexity of local authority schemes create confusion. People with more than £16,000 in savings, for example, are automatically ineligible unless they receive Pension Credit (Guarantee Credit). This complexity can discourage applications, especially when the potential reward seems modest.
While CTS is just one of several underclaimed benefits — alongside Carer’s Allowance and Universal Credit — it holds the highest number of missed cases. As economic pressures persist, the findings prompt renewed calls for more streamlined and transparent support systems that better reach the people they are intended to help.
