Council Tax is a property based taxation system applicable in England, Scotland and Wales for homeowners and tenants above the age of 18 years. It is paid to the local council office every month so that the residents may be able to avail community-based services such as street cleaning, park maintenance, policing, fire service etc. 

Depending on the value of the property, a council tax band is assigned by the local council office. However, a council tax bill is different from other household costs and utility bills. 

Does Council Tax Bill Count As Utility Bill?

No, your council tax bill does not count as a utility bill for the simple reason that council tax is paid to the local council to provide for community-based services and varies based on (a) the local council scheme in your area and (b) the band assigned to your property based on its value.

On the other hand, utility bills are charged for the consumption of electricity, water and gas by a household. Unlike council tax, these bills are paid directly to the service providers and each month’s payment may vary based on changes in the amount of consumption.

Through the content of this article, we will be able to explore the following areas:

  • explanation of council tax
  • eligibility criteria for council tax reduction
  • classification of utility bills
  • analysis of average household costs
  • forecasted cost of living expense in the UK

What Is Council Tax?

Council Tax is a monthly tax collected by local authorities from residents who are above 18 years of age and live in England, Scotland or Wales. The amount of council tax due is based upon the value of the occupied property and the council tax scheme applicable in the area.

It is specific to domestic property and was introduced in 1993 by the Local Government Finance Act of 1992 with the aim to utilise funds for the provision of schools, roads, garbage collection, park maintenance, street lighting among other community-based expenses.

While each council may follow an independent council tax scheme, the general rule is to categorise the properties based on their value and assign a band accordingly. The range of band extends from A to H; indicating an ascending order in terms of property value and hence the amount of council tax rate.

To learn about your council tax band in England and Wales, click on this link and add your home address or postal code Check your Council Tax band – GOV.UK (www.gov.uk) For homes in Scotland, you will need to access the Scottish Accessors website here Scottish Assessors – Scottish Assessors Association website (saa.gov.uk)

Can I Get A Reduction On My Council Tax Bill?

If a property is shared between two adults, a full council tax bill is applicable. Spouses and partners are jointly liable to pay the bill. However, depending on the specific nature of circumstances, certain discounts may be available. These include the following situations:

25% reduction:

If you are above 18 years of age and live on your own, you will be counted as a single adult. This makes you eligible for a 25 per cent reduction on your council tax bill. 

If an adult shares the property with one or more occupants but they are under the age of 18, they will still be considered as a single adult living in the property; thus qualifying them for a 25 per cent discount.

50% reduction:

If the residents of a house are all under the age of 18 years, they will immediately qualify for a 50 per cent reduction in their council tax bill.

100% reduction:

If a house is occupied by full-time students, they are not required to make any payments to the local council and as long as all the residents remain full-time students, the 100 per cent discount remains applicable.  

To check your eligibility for a council tax reduction, contact your local council office here Apply for a Council Tax discount – GOV.UK (www.gov.uk) 

Which Bills Are Classified As Household Bills?

Typical household bills in a UK home generally include the following:

  • council tax
  • utilities
  • internet, TV and Phone
  • TV license
  • insurance

Council Tax:

This is a tax paid to local councils; applicable to all adults (over 18 years of age) who may be homeowners or renters. There is no fixed amount for all residents; in fact, properties are taxed based on their value. Each council follows a council tax scheme according to which properties are assessed and based on their monetary value bands between A-H are assigned; with A being the lowest and H being the highest. While it is an annual tax, it is split across 10 monthly instalments between April to January.

Utilities:

This includes the basic household utilities of water, electricity and gas. These are all consumption-based bills; however, to avoid inflated bills during winter, power and gas companies prepare an annual estimate of year-long consumption and divide the bill equally in 12 instalments. Any changes in the actual bill are then adjusted at year-end.

Internet, TV and Phone:

These are variable bills depending upon individual household consumption and in the case of internet and TV, the choice of services being availed. However, they are a constant household expense in addition to basic utilities.

TV License:

Whether you use a television set, a laptop, mobile device, tablet or any other screening device, a TV license needs to be paid to watch or record live TV channels. The cost of this expense may be paid annually, quarterly or through monthly instalments.

Insurance:

Renters generally apply for Contents Insurance to insure their belongings inside the property against damage or theft. This generally includes all valuable items of personal use. However, homeowners apply for Buildings Insurance in addition to Contents Insurance to cover their property from all forms of damage; both that is human and natural. 

What Are The Average Household Costs in The UK?

According to recent statistics analysed by the Office for National Statistics Family spending in the UK – Office for National Statistics (ons.gov.uk) basic utilities including electricity, water and gas accounted for a monthly expense of £151 for UK households at the end of 2020. 

Meanwhile, the average household costs (including utilities and other household expenses) from the same source indicate a monthly expense of £2, 548 (weekly average £587.9). This is a fall in average expenses from 2019 even though average incomes witnessed an increase during the same period.  

Out of all household expenses, data suggests (Average UK Household Budget 2021 | NimbleFins) that Communications and TV constitute the largest block of expenses with an average monthly spend of £113. This amount is closely followed by electricity and gas costs amounting to £106, with water expenses of £45 per month at the bottom of the list.

Will Utility In The UK Costs Rise Or Fall In The Future?

According to • Projected electricity prices 2020-2050 Statistic | Statista while energy prices in the UK are expected to rise until 2030, there appears to be a constant and then downward trend; indicating a fall in prices until 2050. This may be due to improved consumption methods or the use of alternative/natural sources of energy in the future.

As for gas prices, it is anticipated as per researched data (• UK: gas prices 2017-2024) that there will be a 38 per cent decrease in prices in the next five years.

On the whole, it appears that while council tax may not be part of household utility expenses, with increased housing prices, it may add to increased household expenditures in the next 5 to 10 years; thus increasing the cost of living in the UK.

FAQs: Does Council Tax Bill Count As Utility Bill?

What bills count as utility bills?

Utility bills include your monthly expense for electricity, gas and water. Any additional payments such as council tax, insurance, TV or internet charges are classified as household bills.

Is a council tax bill proof of address?

Yes, a council tax bill can be used as proof of address. Additionally, banks will also accept utility bills, including water, gas, electricity; as well as sewage and telephone bills as proof of address.

Is the internet considered a utility for tax purposes?

Unlike water, electricity and gas, internet expenses are not utility expenses, but they fall in the category of household expenses. However, certain businesses that completely rely on the internet to serve customers, may consider internet expenses like a utility bill.

Is phone expense a utility?

Phone expense is considered as a household expense; not a utility expense.

What Are The Examples Of A Utility Bill?

Utility bills include expenses incurred for the usage of water, gas and electricity. Even though there is an ongoing debate to include TV and cellular bills on the list, these two are still considered to be household and not utility expenses.

References:

What Counts As A Utility Bill? | What Are Utilities? | Utility Bidder

Utility Bill | Payments, Budgetting and Council Tax | Uni Compare (universitycompare.com)

Typical Household Bills | The Children’s Society (childrenssociety.org.uk)

Family spending in the UK – Office for National Statistics (ons.gov.uk)

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.