Council tax and rates
Other tax issues
Council tax is collected in England, Wales and Scotland (although there are some regional differences). In Northern Ireland, there is a rates system instead of council tax. Collection of the tax and rates is carried out by your local council.
What is council tax?
Council tax is a primary ‘local tax’ in the UK, although in Northern Ireland the equivalent tax to council tax is called rates. The money collected through these property taxes goes to local authorities (councils) to pay for local services such as maintaining parks, collecting rubbish, policing and personalised care.
Council tax applies to all properties, including mobile homes, caravans and boats whether they are rented or owned, which are used as the homes of individuals. These properties are described as domestic properties.
This tax is based upon the value of the properties concerned, rather than the income of the individuals who occupy them.
Council tax is calculated for the year from 1 April to 31 March, and is adjusted appropriately when a change of circumstances affects the bill, such as the property becoming or ceasing to be eligible for an exemption or reduction. This means that you need to notify your council of changes affecting your liability.
What are valuations and bands?
Domestic properties are graded in bands from A to H (I in Wales), with A being the lowest band and the tax is set as a fixed amount for each band by your local authority. The valuation of the property is carried out by the Valuation Office Agency (VOA).
The valuation system can be confusing because the basis of the values is an historical value and the systems vary between England, Wales and Scotland. Properties in Wales were revalued in 2003 but in England and Scotland the last valuation was in 1991. Newly constructed properties are also assigned a nominal 1991 (2003 for Wales) value.
The most important thing to understand is which band your own property is in. If you do not know, you can find out by putting your details into the GOV.UK Council Tax band checker.
It is possible to appeal against a council tax banding. Appeals are made initially to your local Valuation Office and can be taken on to an independent Valuation Tribunal if necessary. There is more information on appeals on GOV.UK.
Who is liable to pay council tax?
There is one council tax bill for each ‘dwelling’. The person liable to pay the bill is the person who comes first on the following list:
- A resident freeholder, i.e. an owner occupier
- A resident leaseholder, including ‘assured tenants’
- A resident statutory or secure tenant (that is one whose landlord is a public body or local authority)
- A resident licensee such as someone living in a tied cottage
- A resident with no legal interest in the property, such as a person who has permission to stay.
A ‘resident’ is someone over 18 who lives in the property as his only or main residence. Generally, joint residents are jointly liable for the tax.
If the property is unoccupied, the owner will be liable. The owner is also liable, instead of the residents, in the following cases:
- the people in the property are all under 18
- properties occupied by more than one household or houses in multiple occupation (HMO), where the residents pay rent separately for different parts of the property and where each household perhaps shares cooking or washing facilities, for example, some hostels, nurses’ homes or groups of bed-sits
- residential care homes, nursing homes, such as hospices, mental nursing homes or certain types of hostel providing a high level of care
- religious communities such as monasteries or convents
- properties which are not the owner’s main home, but which are the main home of someone whom the owner employs in domestic service
- vicarages and other dwellings where a minister of religion lives and works. Often, the church is responsible for the bill
- accommodation provided to asylum seekers
What all these rules basically mean is that that if the owners live in the property or if the property is unoccupied, it is the owners who are responsible to pay the council tax. If tenants are renting the property, it is the tenants who pay the council tax, except if the property is a 'house in multiple occupation', in which case the landlord pays the council tax (but the tenants might be asked to pay something towards the bill, depending on the terms of the agreement with the landlord).
How do I pay my council tax bill?
Council tax is normally paid by ten monthly instalments, but other payment methods may be offered. You can find out more about paying council tax on GOV.UK.
If payment is not made on time, the right to pay by instalments may be lost and action may be taken for recovery. Collection may then be enforced in various ways as outlined on GOV.UK, including an attachments of earnings order requiring an employer to deduct the outstanding tax from salary and to account for it to the council.
If you find it difficult to make payments of your council tax when they are due, do seek help. Contact your council immediately if you are having problems keeping up the payments, or contact an advice agency such as Citizens Advice (see our page on getting help for details of how to contact them).
Are there any exemptions from council tax?
Complete exemption from council tax may be claimed in certain circumstances which include the following:
- property which has been legally re-possessed by a mortgage lender
- property left empty by someone in prison (other than for not paying fines or council tax)
- properties that contain full-time students only
- where property is a separate 'granny annexe' or flat occupied by a dependent relative aged 65 or over, or severely disabled (please note that annexes occupied by other family members do not qualify under this exemption, however there is a discount available instead – find out more on the Citizens Advice website under ‘discounts for family annexes’)
- property empty following the occupier’s death – this exemption continues for up to six months after granting of probate or administration
- properties where the occupier has moved out because they have a need to be cared for, perhaps in a care home or hospital or have gone to live with relatives or friends, so the property is unoccupied
- properties where the occupier has moved elsewhere to care for another person so the property is unoccupied
- a property where all the people who live in it are aged under 18
- property which is occupied only by people with severe mental impairment
Councils may offer other exemptions at their discretion, for example for condemned properties or for properties empty and unfurnished, so it is important to check the rules applied by your own specific council.
If you are unsure as to whether your property should be exempt, you should consult an experienced adviser, for example, at Citizens Advice.
Can I reduce my council tax bill?
Council tax bills may be reduced by one or more of the following
To apply for a discount or reduction you need to contact the council tax department of your local council. You may be able to ask for a discount or reduction to be backdated to the date the qualifying conditions were met.
Some councils may also offer second homes discounts and discounts for dwellings that have been empty and unfurnished for more than six months. Other reductions are not necessarily applied consistently across councils either so it is important to check the rules applied by your own specific council.
Citizens Advice Scotland have an online tool to help people check if they are entitled to reductions, deductions or exemptions.
Discounts where there is only one occupier
Council tax bills are generally based on two or more adults living in the dwelling. If there is only one adult in a household then you may be eligible for a discount of 25%.
When calculating the number of members of a household certain groups are excluded such as full-time students and anyone aged under 18. There is a list of who is not counted for council tax on GOV.UK. It includes:
- 18 and 19 year olds who are at, or have just left, school
- someone who is severely mentally impaired
- students and those on certain types of apprenticeships
- care workers working for low pay, for example for charities
- people caring for someone with a disability
To be ‘disregarded’ as a carer under the final bullet point, you must meet all the following criteria:
- You must provide care for at least 35 hours a week.
- You must live in the same property as the person you care for.
- You must not be the spouse or partner of the person you care for, or their parent if you care for a child under 18.
- The person you care for must receive either the middle or higher rate of the care component of disability living allowance (only the higher rate in Scotland), the daily living component of personal independence payment at any rate (only the enhanced rate in Scotland), attendance allowance at any rate (only the higher rate in Scotland), armed forces independence payment or the highest rate of constant attendance allowance.
You do not have to claim carer’s allowance to qualify for this discount, and your income and savings will not affect your eligibility. You can find a factsheet by Carers UK on council tax for carers on their website.
If, after taking into account disregarded people, there is only one person in the property who would ‘count’ for council tax, a 25% discount is applied to the bill. If after taking into account disregarded people, the dwelling is no one’s main home, there could be a 50% discount. For houses that contain full-time students only, the bill will be reduced by 100%
Reduction for disabilities
There may also be a reduction in the band of council tax that applies if the dwelling has special features for a substantially and permanently disabled person such as an extra bathroom or kitchen. A disability reduction will mean that the council tax bill is reduced to the amount payable for a home in the valuation band below yours. For example, if the property is in band D, the council tax bill will be worked out as if it were in band C. If you are in the lowest band already (Band A) you will get a reduction.
In effect, the dwelling is treated as if its market value has been lowered by the adaptations. You can find informatin from Disability Rights UK on council tax for disabled people on their website.
Council tax support scheme
Council tax benefit, which was for people who needed help paying their council tax, was replaced by local council tax support schemes from 1 April 2013. This means that there is no single national scheme, instead each local area operates their own scheme to support residents on low incomes with their council tax payments. Some local councils also have their own local discretionary funds for council tax. These funds may fall under different names, such as the Resident Support Scheme or Hardship Fund. Contact your local council tax department to find out more.
What if I work from home?
The VOA considers a number of things when deciding whether or not part of your property should be liable to business rates. These include the extent and frequency of the business use of the room, or rooms, and any modifications made to the property to accommodate that use.
When using your home for minor business purposes, you will not normally be expected to pay business rates. However, each case is considered on its own merits, and the VOA may visit your property to check the facts before an assessment is made for business rates. Factors they may take into account include:
- extent of use of the relevant accommodation
- frequency and intensity of use of accommodation
- alterations made to the building to accommodate the business thereby losing the domestic character of property
- whether furniture and equipment are of a kind commonly found in domestic properties
- employees or clients coming frequently or regularly to the premises
- hours worked
- advertisement of business at the premises, that is, a nameplate on the door
- planning permission for building works or use of building being obtained. This is not conclusive but is indicative.
This list is not conclusive but indicative.
The VOA has helpfully published a number of examples to illustrate how they would approach the ‘working from home’ question and these can be found in the VOA’s council tax manual (see Practice Note 8).
What are rates (in Northern Ireland)?
In Northern Ireland, there is a system of rates instead of council tax. Domestic rates for residential properties are based on the value of your home on 1 January 2005. Bills and payments are dealt with by the Land and Property Services (LPS) office.
If you are on a low income, you may be entitled to rate relief. There are also allowances for lone pensioners (people living alone aged 70 or over) and disabled people.
You can find out more on the NI Direct website.
Where can I find more information?
You can find a collection of government information about council tax on GOV.UK.
The VOA’s technical manual for assessing domestic property for Council Tax is on GOV.UK.