How does Council Tax work (+3 Tips)

If you live in the UK then it is highly likely you are required to pay council tax

What is Council tax?👀

Council tax is simply property tax charged by local councils. It is used to cover the cost of public services such as parks, street lights etc Any property considered a dwelling will be liable for council tax. This include houses and home boats although boats and mobile homes are only considered when they are your primary residence. It is only charged on domestic property.

If you are moving homes then you should contact your local council and inform them so you are not billed incorrectly. You should also contact the council of the area where your new home is so your bills are sent on time and you do not get an unexpected lump sum bill.

You will typically have to pay council tax if:

  • You are over 18 years old and
  • you own or rent a home

Council tax exemptions and discounts✔

Full time student: If you are a full time student you will not have to pay council tax. The course will have to last for 1 year and involve at least more than 21 hours of study per week.

Disability discount: People who are severely mentally impaired or care for someone who is(excluding spouse, partners or children under 18), are exempt from council tax.

Single person discount: If you are the only person over 18 living in the home you could get a discount up to 25%.

You may be able to get a council tax reduction if you are on low income of benefits

You may also get a 50% discount if no one living in the home including you is an adult

You can apply for a council tax discount here and check for any other discounts or exemptions here

How much council tax should you be paying?

Councils charge different rates for each tax band but they all work based on the council tax band. So whilst some areas my charge cheaper tax and others more expensive, they all rely on the band.

To find out how much council tax you should be paying you should contact your local council. The council tax you pay will be determined by what tax band you are in.

In some cases your tax band can change after your property is reevaluated.

This could happen if:

  • you start or stop working from home( This is because you may now be liable for business rates)
  • the previous owner made changes to your property
  • there are significant changes to your local area, like a new road being built
  • a similar property in your area has its Council Tax band changed
  • you demolish part of your property and do not rebuild it
  • you alter your property to create 2 or more self-contained units, each unit will have its own band
  • you split a single property into self-contained flats
  • you convert flats into a single property

What council tax band are you in?⛳

All home are given a council tax valuation band by the Valuation Office Agency VOA .

You can find your property value here. You can go all the way back to your property value at 1991 there too.

Properties were put into council tax bands based on their values on 1st April 1991 for England and Scotland, and 1st April 2003 for Wales.

You can work out what your property’s value would have been by using the Nationwide House Price Index, even if it was built after the calculation date.

The value of your property at that date will determine your tax band.

E.g A property in England which is valued at £700,000 but was valued at £90,000 on 1st April 1991 will be in the council tax band E.

The Council tax band in England table

Tax BandProperty value: 1st April 1991
AUp to £40,000
B£40,001 to £52,000
C£52,001 to £68,000
D£68,001 to £88,000
E£88,001 to £120,000
F£120,001 to £160,000
G£160,001 to £320,000

The Council tax band in Scotland table

Tax BandProperty value: 1st April 1991
AUp to £27,000
B£27,001 to £35,000
C£35,0001 to £45,000
D£45,001 to £58,000
E£58,001 to £80,000
F£80,0001 to £106,000
G£106,001 to £212,000

E.g A property in Scotland which is valued at £700,000 but was valued at £90,000 on 1st April 1991 will be in the council tax band F.

The Council tax band in Wales table

Tax BandProperty value: 1st April 2003
AUp to £40,000
B£40,001 to £65,000
C£65,001 to £91,000
D£123,001 to £162,000
E£162,001 to £223,000
F£223,001 to £324,000
G£324,001 to £424,000

E.g A property in Wales which is valued at £700,000 but was valued at £90,000 on 1st April 2003 will be in the council tax band C

You can pay your council tax via cash, direct debit or cheque. This can be done in 2 yearly installments or in one payment.

To find out how you could pay your council tax you should contact your local council.

How to challenge your council tax band?💪🏻

You could be overpaying your council tax and should check if you are in the wrong council tax band.

You could be overpaying your council tax because whilst the valuations used to determine what council tax band you should be in was set in 1991, most valuations were carried out in 1993 and the wrong valuations essentially used. In some cases the wrong valuations were just used even though the data was inputted in 1991. By checking if the current valuation has been used for you you could potentially receive a refund worth thousands of pounds.

The difference between the tax bands is significant which means you could be overpaying by hundreds of pounds for as long as you have lived in the property dating back to 1991.

Steps to get a council tax rebate or refund🌈

You must ensure you are eligible for a refund before contacting your council if not you could potentially end up paying more tax if it turns out you are in a much lower tax band than you should be.

  • Check which tax band you are in here
  • Check your home value in 1991 and cross check if you are in the right tax band.
  • Check to see if your home has been rebanded since 1991 and why. This could be because it was built again.
  • Compare at least 5 homes within a 5 minute walking distance of your home to see what tax bands they are in. Make notes of their size and age.
  • Check to ensure your home is comparable in size and structure to your neighbours

It could also be possible that you are in the right tax band and your neighbours are in lower tax bands. If you make an appeal in this case then all your neighbours may receive a council tax increase.

If you still believe you are in the wrong tax band then you can contact your valuations officer and raise your concerns. They will get back to you with a response in due time.

Make a formal council band challenge🔔

If one of the reasons you think your house is in the wrong band is listed on the VOA’s website then you can make a formal challenge to your tax band by challenging your property valuation.

If you are still unsuccessful in your challenge you can still take your case to an independent valuations tribunal.

If you have any complaints about your council tax you should still ensure you pay it whilst your complaint is being handled. The council should take no longer than 3 months to resolve the problem and if you are still unhappy then you should report your case to the local government ombudsman .

If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.