To keep public services going, UK citizens pay council tax, which local councils use to fund projects such as road maintenance, street lighting, leisure and recreation, police and fire services, libraries, educational institutions, and more, except for health services.
This article will provide a quick and easy guide about this tax on domestic property, covering various council tax rates and bands, the scope of exemption, ways to reduce this levy, how to pay, and other most frequently asked questions.
What is Council Tax?
Council tax is a community charge the local council imposes to maintain public services. Every fit resident in the UK of legal age shoulders this liability, with some exemptions depending on their personal circumstances. England and Scotland have the same council tax band and rate, whilst Wales follows a slightly different taxation system.
How much council tax to pay depends on the following:
- Personal circumstances of the resident
- Where they live
- The valuation band their property belongs
- How much their local council needs to maintain public services
Every district imposes different rates. For example, Northern England has the highest living cost throughout the UK, so naturally, Manchester council tax and Leeds council tax are much higher than other cities. Cornwall council tax and Birmingham tax are nearly as high, too. Council tax Wandsworth and North Somerset council tax are comparatively lower.
These districts provide online portals for taxpayers to view council tax bills online, such as Manchester taxes online and others. The UK government uses the Barnett formula to adjust how much public expenses to allocate in England, Scotland, and Wales, so council tax bills may increase anytime.
Who are Exempted from Council Tax?
All properties in the UK are imposed property tax, except when all the occupants are considered “disregarded” for council tax purposes, which results in such a property not being subject to council tax payments. Disregarded residents are as follows:
- Carers
- People in prison
- Full-time students
- Non-British spouses of students
- Individuals under 18 years old
- Armed forces members in military housing
- Diplomats that are non-British citizens or UK residents
- People with severe mental impairment
- People residing in care homes or hospitals
- People receiving care due to old age, disability, illness, alcohol/drug issues, or mental health conditions
- People under the “Homes for Ukraine” scheme
If all residents in a house fit the criteria above, they do not have to pay council tax. For a mixed household with some fit members of working age, they can apply for council tax support or receive it automatically. Check out below other situations that qualify taxpayers for a council tax benefit.
Council Tax Rates and Bands
England and Scotland’s band and rate system differs from Wales. But one aspect remains the same—the more expensive the property’s valuation is, the higher the taxpayers’ payment obligation is. Their differences are as follows:
England and Scotland
Both have eight council bands that range from A to H, where A is the cheapest. The Valuation Office Agency is liable for measuring the value of properties and placing them in one of the tax bands. In England and Scotland, a property’s value is based on how much it would have been priced if sold in 1991, not according to the current value. Here are the bands for the 2023-24 tax year:
| Band | Property Value |
|---|---|
|
A |
Up 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 |
|
H |
£320,001 and over |
Wales
Wales, on the other hand, has nine bands from A to I, where A is also the lowest. The VOA bases the value of the property on how much it would have sold on 1 April 2003. Specific tax rates depend on the ward, just as England’s and Scotland’s. For now, here are the bands for the 2023-24 tax year:
| Band | Property Value |
|---|---|
|
A |
Up to £44,000 |
|
B |
£44,001 up to £65,000 |
|
C |
£65,001 up to £91,000 |
|
D |
£91,001 up to £123,000 |
|
E |
£123,001 up to £162,000 |
|
F |
£162,001 up to £223,000 |
|
G |
£223,001 up to £324,000 |
|
H |
£324,001 up to £424,000 |
|
I |
£424,001 and above |
Since exemptions, discounts, and other means for council tax reduction apply, it is best to consult gov.uk or city-specific government sites and/or tax experts to prevent band mismatches or rate miscalculations.
How to Reduce Your Council Tax Liability
here are several ways to reduce council tax. Generally, reductions are offered as follows:
- Discounts
- Council tax reduction (CTR)
- If not qualified for CTR, other means
Depending on the circumstance, here are the specific government-endowed means to reduce council tax liability:
1. Single-Resident Discount
When people over 18 years old live alone, they are entitled to a 25 per cent reduction on their council tax bill. This discount remains applicable when they live with “disregarded” people—in this case, they are still considered living alone even if they are in a house in multiple occupation.
2. Early Payment Discount
People who pay council tax in lump sum earlier (before 1 April) are entitled to a 1.5 per cent discount.
3. Disabled Relief
Living with people with disabilities and having features at home to accommodate these residents can qualify a taxpayer for disabled relief.
4. Pensioners Support
People at pensionable age can get up to a hundred per cent reduction of their council tax obligation, specifically those who receive the guarantee credit part of the pension credit—they will not have to make council tax payments. A certain amount of discount applies to those who receive the savings part of the pension credit.
5. Second Home Discount
Discounts apply to homes no one lives in—second homes or holiday homes, for instance. Holiday homeowners usually get a 10 per cent discount. Second homeowners, especially if they need to relocate for work and leave such home empty, can get up to 50 per cent discount.
6. UK Benefits
People can also get “habitually resident” discounts if they can show that the UK, Ireland, Channel Islands, or Isle of Man is their main home and they plan to stay.
7. Council Tax Reduction
This applies to both working and pension-age individuals. They can take advantage of the Welfare Reform Act 2012, which may be any of these—Universal Credit, income-based Jobseeker’s Allowance (JSA), income-related Employment and Support Allowance (ESA), or Income Support. The local council will decide if they qualify, and if so, how much discount they can get.
8. Second Adult Rebate
If taxpayers cannot get the CTR above, they can apply for this rebate when the person they live with is on a low income and receives certain benefits.
9. Council Tax Discretionary Payment
This support applies to people who are legitimately experiencing “exceptional” hardship due to unforeseen circumstances, such as losing their job. In this case, they can get from 75 to 100 per cent hardship relief.
How to Pay Council Tax
Normally, a 10-month instalment payment council tax applies and two months following without making payments (February and March). However, some councils offer 12 months instead of 10. The precepting authority appoints billing authorities to collect council tax revenues.
The most convenient way to pay council tax is via direct debit, but taxpayers can also opt for the following means:
- By post
- Using a credit or debit card
- At the Post Office or by PayPoint/Payzone
- By telephone
- Pay council tax online using the BRUM account
- Through personal internet banking (bacs)
FAQs About Council Tax
How Do I Know If I am on the Wrong Tax Band?
Those who think they are in the wrong tax band can appeal to the Valuation Office Agency and ask for a review. Once the appeal is successful, they will be sent the corrected bill and/or refund. Whilst the appeal is ongoing, they must keep paying the same amount written on their current bill. However, they should take note that asking for a review may also result in being placed in a higher band.
How Can I Complain Against My Council Tax?
For complaints, taxpayers should approach the council first. Normally, it takes not more than 12 weeks to get them solved. If unsatisfied with the outcome, or the complaint is resolved longer than the expected period, they can make direct complaints to the Local Government Ombudsman. The waiting will be within two months. If they did not receive any feedback, they could appeal to a valuation tribunal.
What Do I Do If I Think That My Bill Is Wrong?
If taxpayers think they did not receive their discount entitled or the other way (received a discount when they were not supposed to), they can contact their local council. In the latter case, not informing the local council might mean a £70 penalty.
What Happens If I Get Behind My Council Tax Liability?
Falling behind council tax arrears, even for just a month, can be very detrimental for a taxpayer. Once they think that they cannot pay tax on time, they should inform their local council immediately.
They might work it out with the taxpayer—either allow the latter to make late payments or increase future payments to compensate for the missed months. If not informed, the local council may impose an upfront full-year payment. Tax based reductions also apply, especially for those with lower incomes.
What Happens If I Ignore My Council Tax Liability?
If someone does not pay their Council Tax and ignores the letters they receive, it can become a serious issue. First, the council will send them a reminder about two weeks after they miss a payment. If they pay within seven days, there is nothing else they need to do, and the debt will be cleared, allowing them to continue paying their council tax in instalments.
However, if the taxpayer does not pay within seven days of the reminder or if it is the third time they have been late with council tax payments in that year, the council will send them a “final notice.” This final notice will require them to pay all their council tax for the remainder of the year within seven days.
If they still do not pay within seven days of the final notice, the council may apply to the courts for permission to collect the debt from them, which is called a “liability order.” The council’s legal costs (e.g., hiring a lawyer) may be added to their debt, which they may opt to pay or not depending on their circumstances. After obtaining this order, the council can have the person’s employer deduct their unpaid council tax directly from their wages.
How Legend Financial Can Help
There are many ways to manage your council tax liabilities, which Legend Financial is adept about. We can help you in every way, from working out your rates to helping you obtain the discounts that are rightfully yours. As an established expert in the industry, we have your back for all your tax matters. Talk to one of our tax professionals today!
References:
Council Tax: what it is, what it costs and how to save money. (n.d.). Retrieved from Money Helper: https://www.moneyhelper.org.uk/en/homes/
buying-a-home/how-to-save-money-on-your-council-tax-bill
Check if you can pay less council tax. (n.d.). Retrieved from Citizens Advice: https://www.citizensadvice.org.uk/
housing/council-tax/check-if-you-can-pay-less-council-tax/
Reduce your Council Tax bill. (n.d.). Retrieved from Havering: https://www.havering.gov.uk/info/20000/
council_tax/276/reduce_your_council_tax_bill
How to get a council tax reduction or discount. (n.d.). Retrieved from Which: https://www.which.co.uk/money/tax/council-tax/reducing-your-council-tax-bill-aLypQ8m1id2b
Check your Council Tax band. (n.d.). Retrieved from Gov.UK: https://www.gov.uk/council-tax-bands
Council Tax bands and rates. (n.d.). Retrieved from Lambeth: https://www.lambeth.gov.uk/council-tax/bands-rates
Council tax bands and charges. (n.d.). Retrieved from Caerphilly: https://www.caerphilly.gov.uk/services/council-tax/council-tax-bands
Pay your Council Tax. (n.d.). Retrieved from Birmingham City Council: https://www.birmingham.gov.uk/info/20005/
council_tax/223/pay_your_council_tax
Top 10 most expensive UK towns for council tax in 2022. (5 April 2022). Retrieved from Telegraph: https://www.telegraph.co.uk/money/property/top-10-most-expensive-council-tax-towns-uk-rebate-2022/
