Council tax is a monthly tax paid directly to the local council office in lieu of the community-based services that they provide. The purpose of this blog post is to explore the possibilities of whether or not council tax can be included in the rent and what the repercussions for a tenant should this be the case. For an in-depth understanding of how council tax applies to properties, we will also review how council tax discount is applied, which properties are council tax-exempt, how to pay one’s council tax bill and the consequences of not paying your council tax.

Is Council Tax Included In Rent?

No, as a general rule for sole tenants, council tax is not included in rent and is charged separately and directly by local council authorities. In the case of rare exceptions when a landlord includes the council tax in the tenant’s rent, you must be careful about it being mentioned in the tenancy agreement as well as gathering evidence of timely payments to local authorities. In the case of unpaid council tax, the authorities will question the tenant (and not the landlord) as they are liable to pay council tax.

However, in case a property is occupied by multiple tenants at the same time or you are renting only a specific part of the house, it is best for council tax to be included in the rent as being a joint tenant, one individual cannot be held liable for council tax payments. In such cases, the council tax bill will also be addressed to the landlord’s name and not the tenants’.

If someone lives in a council house or social housing project, it may be practical and advisable to have their council tax added along with their rental payments. The reason for this is the fact that in most cases where council/social housing tenants are receiving Housing Benefit to make rental payments and those payments are being paid directly by the DWP to the tenants’ landlords, it may be convenient to have council tax added in the rent. 

Council tax bills are sent in the name of the person who is registered as the one ”liable” for such bills. This means that even if someone is living with their parents they are not responsible for making council tax payments if they are not considered to be liable for them by the local council office.

Council tax becomes payable upon those who fall under the hierarchy of liability; which looks something like this:

  • at the top of the hierarchy is the resident who owns either the leasehold or freehold of the property;
  • the second in line is a resident tenant;
  • this is followed by a resident who is not a tenant but lives on the property;
  • then comes any resident occupying the property;
  • and finally, the owner of the property while it remains unoccupied

Who Is Eligible For Council Tax Benefits?

To qualify for a council tax benefit certain criteria need to be met. Following are some examples: 

  • Two adults who live in the same house qualify to pay full council tax; they may share the bill. However, if a single adult is living on a property by themselves, they may be eligible for a 25 per cent reduction in the bill irrespective of the fact whether they are part-time employees or full-time ones. The same rule applies if an adult is sharing the premises with one or more individuals under the age of 18 years.
  • A 50 per cent council tax benefit becomes applicable if all the residents of the household are under 18 years of age. Complete exemption or a 100 per cent discount is applicable if all the residents of the said premises are full-time students.
  • Individuals on a low income or those receiving other forms of public support qualify for a 100 per cent discount on their council tax bills. To apply for this exemption, claimants may be homeowners or tenants; they may either be unemployed or working. 

Who Is Exempt From Council Tax?

Should someone fall under any of the below categories, they will be considered exempt from having to pay their council tax bills:

  • the resident lives in a care home and not their own home
  • the resident is under hospital care
  • the resident is living somewhere else; providing care to another person
  • the resident is in the armed forces 
  • the resident is in prison (not for non-payment of council tax bills)
  • all the residents are full-time students
  • all the residents are under 18 years of age
  • all the residents are mentally impaired

Then there may be situations that are property-centric; making the premises ineligible for council tax to be applied. These may include:

  • the property is used for charity work
  • it is an annexe to the main property
  • the property is repossessed
  • it has been purchased to be demolished

Do You Have To Pay Council Tax Every Month?

Yes, council tax bills are paid through monthly instalments that range from the months of April to January.

Council tax is based upon the valuation band that a property is categorized under by the local council and Valuation Office Agency. While the local council may assign an annual bill in April, the annual tax is spread over 10 monthly instalments to make payments convenient for individuals as well as to account for any desirable changes such as inflation rates. 

If an individual is unable to afford their monthly council tax instalment or would require a relief, they may request to have the annual bill be spread over 12 monthly instalments versus the usual 10 instalments. This reduces the per month average due to which the due amount is decreased.  

In terms of mode of payment, local councils may accept weekly or fortnightly payments as well. Generally, a discount may be availed if the payee chooses to pay the entire annual tax bill in advance.

How Do I Pay My Council Tax Bills?

Direct Debit is the most convenient method of making council tax payments since the annual tax is split across 10 monthly instalments and the payment plan is shared by the local councils at beginning of the term in April.

While the instalments assigned by local councils are 10, individuals wishing to spread them over 12 months instead may apply to their local council office and request the same. Payments may also be made on an annual or half-yearly basis.

Although the instalments are due on the 1st of each month, individuals choosing to pay through direct debit may choose the 1st, 8th, 15th or 22nd.

What Happens When Someone Misses Their Council Tax Payments?

While it is best that individuals expecting to be unable to pay their council tax bills inform the local authorities in advance so that if there is any leverage possible from the council’s side, it may be extended in time. However, if a resident chooses to stop making payments, the following order of events would take place as a reaction from the council office:

Step 1: When a resident has misses their council tax payment for the first time, the council office sends them a reminder to clear their dues in the next 7 days. 

Step 2: If the resident continues to defer council tax payments twice in a row, a second reminder will be sent by the local council office, asking them to clear their dues. Within one financial year, there will only be 2 such reminders sent. The next communication will be a final notice from the council’s side, which serves as a legal demand for council tax debt to be cleared. 

Step 3: After the final notice, the council can now apply for a Liability Order to be drawn up upon the debtor. The next communication between that of the council and the debtor would be a magistrate court summons which demands clearance of dues on an immediate basis or court appearance in the next 14 days. 

Step 4: If council tax dues are not cleared by the debtor and the date of the court hearing arrives, a Liability Order will be issued in their name (irrespective of whether or not the debtor appears in court). Should the debtor be in any form of financial hardship or facing a severe health condition, they must seek advice from a reliable consultant or their local Citizens Advice bureau. 

Step 5: In case of a lack of defence from the debtor’s side, the Liability Order will now be issued. This authorises the council for deduction of dues from debtor’s wages, any benefits that they may be receiving such as Income Support, Job Seeker’s Allowance, Pension Credit, Universal Credit, Employment and Support Allowance, visit by a bailiff to seize valuables amounting to the council tax dues from the debtor’s property or court proceedings that usually lead to jail time of 3 months. 

Conclusion:

From the points discussed above, we can conclude that council tax is generally not included in the rent that sole tenants pay to their landlords; however, it may be added in cases where the tenant is sharing a house with someone else as joint tenants or they have only rented a portion of the house. In the case of social or council housing projects, it is common for council tax to be included in the rent. 

FAQs: Is Council Tax Included In Rent?

How do I pay Council Tax when renting in the UK?

You need to register for council tax payments by calling your local council office so that they may send you the annual bill in 10 monthly instalments. While you may choose any preferred mode of payment, Direct Debit is the most convenient method of making council tax payments. 

Do renters in the UK pay Council Tax?

Yes, renters or tenants are liable for the house that they are living in as long as they are the sole owners. If they have partially rented out a property or there are multiple tenants in the same property, the landlord can add the council tax to the tenant’s rent and pay the council tax bill. 

Do landlords pay tax on rent?

If you are a landlord, the rental payment that you receive from a tenant counts as an income and is therefore liable for tax payment.

Is a landlord liable for unpaid council tax?

Unless the council tax bill appears in the landlord’s name they are not liable for unpaid council tax. Tenants with council tax arrears can be tracked down by council authorities as they remain liable for unpaid council tax even if they move homes. 

Does everyone in a house pay council tax?

Any individual, over the age of 18 years, whether a homeowner or tenant, employed or unemployed, is eligible to pay their council tax bills to the local council office. Usually, one person is considered the prime point of contact and is “liable” to pay council tax bills. Couples sharing premises are jointly liable for their council tax bills; however, anyone of them may be listed to be considered as liable for payments. In the case of a rented property, it is the tenant who is liable to pay council tax. 

References:

Is Council Tax included in the rent? What you need to be aware of! – LGFA92

Is Council Tax Included In Your Rent?

Is council tax included in my rent? | thinkmoney

Are You Responsible For Paying Council Tax?

Council Tax: Who has to pay

Paying council tax

Council tax exemptions

Council Tax Reduction – Who can apply?

Citizens Advice

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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.