By Matt Fernell, Editor-in-Chief at Finance.co.uk. Last updated 31st January 2023.
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.
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.
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:
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.
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:
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:
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:
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.
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.
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:
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.
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:
Remember, these options could vary depending on your local council, so it’s a good idea to check your bill or local council website.
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:
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.
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.