Council tax is a local tax on homes which is collected by local councils. The money raised from council tax collections is used to pay for local services such as policing, rubbish collections and the maintenance of parks.

Over 22 million homes are liable for council tax in UK which raises approximately £24 billion every year for local authorities. Find out how council tax is calculated and whether you’re entitled to a discount.

How is council tax calculated?

The amount of council tax you pay depends on the market value of your property. All homes are given a council tax valuation band by the valuation office agency (VOA).

The bands are based on the value of your home on April 1 1991 and run from A-H for England and Scotland and A-I for Wales, with a different amount of council tax charged for each band. Northern Ireland follows a completely different system based on the value of individual properties.

The valuation bands for England are as follows.

Council tax band

Range of values

A

Up to £40,000

B

Over £40,000 and up to £52,000

C

Over £52,000 and up to £68,000

D

Over £68,000 and up to £88,000

E

Over £88,000 and up to £120,000

F

Over £120,000 and up to £160,000

G

Over £160,000 and up to £320,000

H

Over £320,000

While the valuation bands are standardised councils set their own council tax rates based on the amount of money they need to raise to provide essential services for the coming year. This means that council tax charges will vary from area to area.

For example, a property in band C in the London Borough of Redbridge will pay £1,257.97 council tax for the year 2016/17, while a band C property in Kensington and Chelsea will pay £926.93 for the same year.

[Related story: What to do if you can't pay your Council Tax bill if you have Council Tax arrears]

Revaluing your home

It’s possible that a house can be re-valued by the VOA and move from one band to another.

Changes that could cause your property to be moved to another band include such things as:

  • splitting a property into self-contained flats;
  • converting flats into one dwelling;
  • or demolishing part of your property and not rebuilding it.

If for any reason your property is moved to another band the VOA will contact you and a revised council tax bill will be issued.

Properties exempt from council tax

While most properties fall within a council tax band, some properties are exempt from council tax altogether or are exempt for a limited period. Properties which may fall into this category include:

  • condemned properties;
  • unoccupied property where the owner has moved into care;
  • a holiday caravan or boat if it’s on a property that pays council tax;
  • a self-contained granny flat where the occupier is dependent on the owner of the main property;
  • a property which is unoccupied due to major repair work or structural changes rendering the property uninhabitable. 

Who pays council tax?

Most houses are liable for council tax whether they are owned or rented and it’s usually up to the person or people who live in the property to pay the council tax bill. More than one person can be liable for the payment of council tax, for example a married couple will be jointly liable as would joint tenants of a property.

If more than one person lives in a property, then a system called the hierarchy of liability is used to work out who is liable to pay the council tax. The person or people who find themselves at the top of the hierarchy are liable for payment.

The order of the hierarchy of responsibility is as follows:

  • a resident freeholder;
  • a resident leaseholder;
  • a resident tenant;
  • a resident licensee (someone who isn’t a tenant but has permission to stay there);
  • anyone living in the property regardless of tenure eg a squatter;
  • the owner where no one is resident.

Occasionally it will be up to the owner of the property to pay the council tax rather than the person occupying it. The owner is liable for payment of council tax in the following circumstances:

  • homes where there are multiple tenants who all pay rent separately;
  • the people who live in the property are under 18 years of age;
  • the property is accommodation for asylum seekers;
  • the property is not a main home for the occupiers;
  • the property is a care home, hospital, hostel or women’s refuge.

[Related story: Revealed - where your council tax money really goes]

Council tax reductions

Not everyone will have to pay the full council tax. If you live on your own, or no one else in your house is considered an adult, you could be entitled to a 25% discount on your bill.

If no one living in your home is considered an adult, then you could get a 50% discount.

If everyone in your home including yourself is a full-time student, you’ll be exempt from paying council tax but you’ll have to apply for an exemption.

There is also a reduction scheme for disabled people. If there is someone living in the property who is disabled, you can apply for a reduction. You’ll need to do this in writing and provide supporting evidence, such as a letter from a doctor or health visitor.

People on low income or benefits may be entitled to a reduction in council tax. Again you’ll have to apply for a council tax discount. There's more information on how to do this on the Gov.UK website.

Some councils offer a reduced council tax bill for second homes or empty properties but you would need to speak to your local council to find out what their policy is.

Paying your bill

Your council tax bill will explain how much your annual council tax is, how the amount has been worked out including any relevant reductions, when you have to pay your bill and the various methods of payment available to you. The bill is usually split over 10 months, but some councils offer 12 monthly payments if it suits your financial situation better.

If you find yourself struggling to make payments, you should contact your local council immediately. If you miss a payment you will get a reminder, but if you continue to miss payments you could lose your right to pay by instalments, have payments taken from your benefits or face a visit from bailiffs.

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