Council Tax: How much should I be paying?

By Matt Fernell, Editor-in-Chief at Finance.co.uk. Last updated 31st January 2023.

Matt Fernell

No one likes paying taxes, and council tax can feel like another big expense from already stretched budgets, without really knowing where all that money is going.

We want to help you understand why we pay council tax, what it’s used for and how our bills are calculated.

What is council tax?

Council tax is a tax on residential properties paid to the local council authorities.

Some properties are exempt from council tax, and some people have their bills discounted, but for the most part, it’s something all households have to pay, whether you rent or own your home.

What is council tax used for?

Council tax is how local authorities fund services like the police, fire service, public libraries and the maintenance and development of public spaces like roads and parks.

Any local government or council service is paid for with the money collected through council tax.

Whilst we may not enjoy paying council tax, our towns and cities wouldn’t be able to run smoothly without it. Your council tax bill will normally provide you with a breakdown of where different parts of your annual council tax bill go.

Here’s a list of the types of things your money helps pay for:

  • Waste collection
  • Schools, education and youth services
  • Maintaining car parks and public spaces
  • Maintaining and redeveloping roads, highways and street lighting
  • Children’s social care
  • Police and fire services
  • Support for the elderly and vulnerable
  • Social housing
  • Planning and building control services
  • Coroners, registrars, courts and elections
  • Street cleaning and flood defences

Your city council is normally responsible for collecting your council tax, though a portion of it will often go to your county council. Sometimes, if you live in a certain area, the parish council for that area will charge an extra levy, though this will still be collected by the city council.

Do I need to pay council tax?

Your council tax bill is calculated per household, and a full council tax bill is based on two or more adults living in the property; some people will be “disregarded” from a council tax bill.

In each household, there will typically be one person, known as the liable person, responsible for paying council tax. Spouses and partners living together are jointly liable.

In most cases, this is the person living in the property, so if you rent a house, you’ll likely be responsible for the council tax.

A property owner is responsible for the council tax if:

  • They live in the property
  • The house is lived in by multiple people who pay rent separately
  • Everyone who lives in the house is under 18
  • The residents are asylum seekers who aren’t entitled to benefits
  • The property isn’t the primary residence of anyone who’s staying there
  • The property is a care home

What about exemptions and discounts?

Some people are exempt from council tax; this is known as being disregarded. If everyone in your household is disregarded, you’ll get a 50% discount on your bill. If you live alone or everyone else in your household is disregarded, you’ll be entitled to a 25% discount.

There are several reasons someone might be disregarded from a council tax bill, such as:

  • Those under 18 years old
  • Prisoners, or those detained prior to deportation or mental health legislation
  • Full-time students
  • Those aged 18 and 19 in full-time education
  • Those under 25 who get funding from the Education and Skills Funding Agency
  • Those on qualifying apprentice schemes
  • Live-in carers for someone who is not their partner, spouse or child under 18
  • Diplomats
  • Members of some religious communities
  • The severely mentally impaired

In some cases, you will get a 100% discount on your council tax, for example, if everyone in your household is a full-time student at college or university or you’re severely mentally impaired and live alone or with other adults who are severely mentally impaired.

There are also some instances where a property may be exempt from council tax, such as:

  • Properties that are unoccupied and unfurnished for up to 6 months
  • Properties that are unoccupied and undergoing major renovations for up to 6 months
  • Properties that have been condemned or repossessed by a mortgage lender
  • Properties where the resident has had to move to be cared for
  • Properties where the resident has had to move to care for someone else

If you own or rent a second or holiday home, you’ll usually have to pay council tax, though the local council may decide to give you a discount. However, if your property has been empty for more than two years, you can be charged a premium, and you can be charged up to four times your regular council tax if the property has been empty for ten years or more.

You can check on the Gov.uk website to check if you’re eligible for exemptions or discounts on your council tax bill.

How much is council tax?

The council tax you pay depends on various factors, such as your location, what council tax band your property is in and whether you’re entitled to any discounts.

Council tax valuation bands

Local authorities will keep a list of all the properties in their area, each placed into a valuation band. These bands range from A - I, with A being the lowest. Each band is charged a different amount of council tax.

These valuation bands were determined by the property's value in April 2003, so how much each property was worth in 2003 decides which council tax band it’s in. Here's a list of the council tax bands and the values from 2003:

  • A - Up to £44,000
  • B - Over £44,00 but under £65,000
  • C - Over £65,000 but under £91,000
  • D - Over £91,000 but under £123,000
  • E - Over £123,000 but under £162,000
  • F - Over £162,000 but under £223,000
  • G - Over £223,000 but under £324,000
  • H - Over £324,000 but under £424,000
  • I - Over £424,000

You can use the Gov.uk website to find out what band you’re in, or, your council tax band should also be stated on your council tax bill.

It’s worth noting that this valuation band system was updated in 2005, and some local authorities could still be using the old valuation band system. If this is the case, the bands will range from A - H, and will be based on the value of your property in April 1991.

Generally speaking, the bigger your property, the higher your valuation band and the more council tax you’ll pay.

The amount of council tax each band pays is decided by the local authority, so the council tax for a band B property in Manchester will vary from a band B property in Newcastle. The government sometimes releases guidance around how much council tax can rise in their budget.

How do I pay my council tax?

When you receive your council tax bill, it should tell you how and when you need to pay.

Typically, your annual council tax bill will be split into 10 instalments, though some people choose to pay over 12 months to help them budget. If you pay over 10 months, you’ll usually not pay council tax in February or March.

You’ll normally be able to pay your council tax:

  • Online
  • By Phone
  • Cash payments using services like ‘Paypoint’ or ‘Payzone”
  • By Direct Debit

Remember, these options could vary depending on your local council, so it’s a good idea to check your bill or local council website.

If your circumstances have changed

It’s important to keep your local council updated with any changes that could affect your council tax bill as soon as they arise. Here are a few examples of situations where you need to get your bill updated:

  • You were previously living alone, but your significant other has recently moved in - If you were living alone and receiving a single-person discount, you would no longer be entitled to the discount when your partner moved in.
  • You’re moving house - If you’re moving house, you need to inform the relevant authorities whether you’re staying in the same area or not. As council tax is calculated based on property value, it’s vital you let any local council know as soon as possible.
  • You or someone in your household has left full-time education - If you or someone in your household was in full-time education, they would have been disregarded from the bill; if you were claiming a discount because they were disregarded, you’d no longer be eligible for this discount.

Whilst it may seem tempting not to keep your local council updated, it’s important that you do. You can be fined for not letting the council know you’ve received a discount you’re not entitled to, and you could also be liable to pay back the discounted amount.

What if I'm struggling to pay my council tax?

If you’re struggling to pay your council tax, it’s important not to bury your head in the sand; missing a payment could have serious consequences.

The best thing you can do is to contact your local council, because there will be ways they can help you.

If you’re on a low income, you may be able to get a council tax reduction or move your payments over 12 months instead of the usual 10, bringing down your monthly instalments and helping you to budget over the year.

Missing a council tax payment can have pretty serious repercussions, and you could no longer be able to pay your council tax in instalments; they could ask for the full year’s balance upfront.

Remember, don’t just ignore the problem; if you end up in arrears on your council tax, the local authorities may ask the court to issue a court summons. At this point, you have until the date on the summons to pay off your arrears; if you don’t, the magistrates can issue a liability order, meaning the arrears will be deducted directly from your income, or bailiffs could seize your possessions to help pay off the debts.

It’s important to avoid this situation; it’s vital you speak to your local council as soon as you think you may miss a payment; they could give you extra time to pay your bill or be able to add the missed payment to your future payments if you think you’ll be back on your feet by then.

The information provided does not constitute financial advice, it’s always important to do your own research to ensure a financial product is right for your circumstances. If you’re unsure you should contact an independent financial advisor.