Council tax is a property-based tax that pays for community services for residents of a council district. This blog post will mainly focus on the reason why certain individuals find their council tax to be high when they compare it to friends and family. However, for a full picture, we will also discuss the council tax valuation bands, how council taxes are assessed, conditions that may qualify individuals for council tax reduction. Towards the end, we will also analyse forecasts made rising prices in the UK.

Why Is Council Tax So High?

The reason why certain domestic property dwellers find council tax to be high may be due to the fact that the amount due on individuals for this property based tax is calculated according to the market value of one’s property and the consequent valuation band assigned to it.

The Valuation Office Agency (VOA) initially assessed the market value of properties according to their worth in 1991 (this is a uniform practice across the UK) to assign them a valuation band. 

There are eight bands that run across A to H, with Band A assigned to properties with the lowest value and increasing up to Band H for properties with higher values. It is on the basis of this assigned band, that the amount of council tax is decided. Therefore, the higher the valuation band, the higher the council tax payments.

Below is a detailed classification of council tax rates according to their valuation bands:

Council Tax BandProperty Value
AUp to £40,000
BOver £44,000 and up to £52,000
COver £52,000 and up to £68,000
DOver £68,000 and up to £88,000
EOver £88,000 and up to £120,000
FOver £120,000 and up to £160,000
GOver £160,000 and up to £320,000
HOver £320,000 

For an average property of Band D, the highest council tax is currently being paid by residents in Nottingham in England for £2,226, while the residents in Westminster pay the lowest rate of council tax at £829. The reason for this variation in amounts is the fact that each local council office sets its own council tax rates to bands due to which different people across council will pay a different amount of council tax for the same valuation band. This is also one of the reasons why some individuals may feel that their council tax bill is too high.

If you think that your property has been incorrectly valued or you have been erroneously assigned an incorrect council tax brand, it is advisable for you to contact your local council.

In addition to a property’s value, the Valuation Office Agency considers the following factors when assessing a property for valuation purposes:

  • location
  • size
  • character
  • layout
  • purpose or use

With the ongoing inflation over the past two years, there has been a constant rise in council tax rates. Council tax rates increased by 5 per cent in 2021 and it is anticipated by financial experts that there will be a further rise by April 2022.   

How Can I Avail Council Tax Reduction?

Whether residents own or rent their homes, they may qualify for a council tax reduction in their bill, if they meet any of the following criteria:

  • living alone: regardless of financial circumstances, living alone is enough reason to avail of a 25 per cent discount as council tax rates are established on the assumption that each house will comprise of two adults.
  • living with a full-time student: full-time students and student nurses are exempt from council tax bills. Sharing a residence with them qualifies you for a discount.
  • living with someone below 18 years of age: since council taxes are applicable on adults, anyone below the age of 18 does not qualify to be counted as a member of the shared household where council tax is levied.
  • being a carer: while there are additional criteria to be considered her, being a carer for another member of the household for at least 35 hours per week qualifies the individual for a CTR. 
  • changes in home value: if there is a change in the surroundings of your residential property causing a full-time decrease in its value, the council tax band may be lowered by a valuation expert, enabling you to enter a lower band with reduced council tax bills due.
  • the desired mode of payment: while council tax payments are spread over 10 monthly instalments, should you require a change such as 12-month instalments, it will reduce the monthly amount to be paid. On the other hand, should you prefer to pay the annual amount in a lump sum, a bulk payment may also qualify you for a discount.

How Can I Get Exemption From Council Tax?

To be able to claim eligibility for exemption council tax payments, claimants must be able to fulfil the following criteria:

  • the owner does not live in the said property and lives in a care home
  • the owner is receiving hospital care at a medical facility
  • the owner/tenant is temporarily living elsewhere to take care of someone
  • the owner/tenant is in the armed forces and is stationed away from the premises at times
  • the owner/tenant is serving jail time in prison (not for non-payment of council tax bills)
  • the said property is/was registered by a charity and is not used for residential purposes
  • the said property is an extension/annexe of single property
  • properties that have been repossessed
  • properties that are purchased to be demolished

If an individual fulfils any of these criteria, they must contact their local council office and raise an appeal for council tax exemption.

Will Council Tax Rise In 2022?

Yes, as per estimates of the Institute for Fiscal Studies that appeared in Council Tax set to rise by £100  and Council tax could rise by £220, council tax is expected to rise by a minimum of 3.5 per cent or £100 annually over the next three years. This is, however, the minimum estimate as the rates could go up to the maximum ceiling of a 5 per cent rise.

The main reason for this increase in council tax is being cited as the underfunded social care schemes announced by the government. The social care system which aims to support and assist the elderly and disabled with everyday tasks has been under question for a long time due to a lack of government funding and much needed structural reforms. It is estimated that there are around 1.5 million people in need of social care but lack access to it since it is means-tested.

The said scheme is expected to cost around £5 billion annually. 

Will Utility Costs In The UK Rise In The Future?

According to 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 that there will be a 38 per cent decrease in prices in the next five years. This forecast coupled with the current fuel shortage in many parts of England, the recent surge of 12 per cent in energy costs, cuts in Universal Credit, and expected price rises ahead of Christmas due to shipping shortages pose a cost of the living crisis of low-income households. 

Are Property Prices Rising in the UK?

According to statistics shared in a recent article in The Guardian, the summer of 2021 witnessed a peak in property prices. The reason cited for this extraordinary growth is the increased need for home spaces as more and more people opt to work from home. 

It is further expected that property prices will fall in the next few months. Despite this, the year will end at witnessing a 4.5 per cent increase in property prices as compared to 2020. As per the same article, since this price hike is expected to continue in the future as well, an increase of 3.5 per cent is anticipated between 2022 and 2024.

What Are The Average Household Costs in The UK?

According to statistics analysed by the Office for National Statistics Family spending in the UK on 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) indicate a monthly expense of £2, 548 (a weekly average of £587.9). This is a fall in average expenses from 2019 even though average incomes witnessed an increase during the same period.  

Conclusion:

Through this detailed discussion, we have come to understand the reasons why individuals find council tax to be high; while some may find it to be much higher than others due to the market value of their property. Experts forecast council taxes to rise in the near future, but these are not the only household costs to increase. In addition to council tax, it is expected that property prices and utility bills may also rise, causing a ripple effect to raise average household costs in the UK.

FAQs: Why Is Council Tax So High?

Can you avoid council tax?

No, you cannot avoid council tax unless you fall under the criteria for council tax exemption. This may include but is not limited to a resident to be receiving hospital care at a medical facility, temporarily living elsewhere to take care of someone, serving in the armed forces and is stationed away or serving jail time in prison.

Why is my council tax higher than my neighbours?

The reason why your council tax is higher than your neighbours could be due to a variation in the size, layout, purpose or use of your respective properties. It may also be due to the reason that your neighbour qualifies for a council tax reduction while you may not.

What is the highest council tax in the UK?

The highest council tax in the UK applies to Nottingham, Dorset and Rutland where the average annual council tax for Band D properties are estimated at around £2,226, £2,223, and £2,195 respectively.

What is the highest council tax band?

Out of the eight council bands for council tax, the highest one is Band H which applies to properties valued above £320,000.

Do you pay council tax on universal credit?

If someone is on Universal Credit, they may be eligible for a maximum discount of 82.5 per cent on their council tax bills and will be required to pay 17.5 per cent of the total amount.

References:

Council tax rises: Why is it always going up? – TaxPayers’ Alliance

Council Tax: what it is, what it costs and how to save money

Council tax: Why do some areas pay more and how can you reduce your bill? | This is Money

Council Tax – Home 

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

Check if you can pay less council tax

Apply for Council Tax Reduction

Council Tax Support | Claiming Benefits

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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.