What is Council Tax?
Find out more about council tax, including what it is and how much you need to pay
What is council tax?
Council tax is paid by homeowners in order to pay for local services like education, roads, fire and police services and rubbish collection.
Council tax must be paid by the owners of most domestic properties, including houses, flats, bungalows and even houseboats. Each property is placed within a council tax band based on the valuation of the property, the charges set by your local council and you eligibility for potential discounts or exclusions.
How much is council tax?
The amount you pay in council tax depends on how many adults you have living under one roof and what council tax band your property falls into – we’ll discuss council tax bands in greater detail later on.
Council tax is charged at a daily rate, with bills sent out to cover a 12 month period starting at the beginning of every financial year (April 1st).
Who pays council tax?
Council tax is usually paid for by the person who occupies the property – either the owner or tenant. A letter will be sent to the property’s address indicating the amount that is due, as well as the option to make a one-off payment or spread the cost with monthly instalments.
Council tax discount
There are certain circumstances which allow for council tax to be reduced. For example, if you have a particularly low income or are experiencing what is described as ‘exceptional hardship’ for reasons out of your control, you might be entitled to a tax rebate of up to 100%.
To get this discount, you will need to provide sufficient evidence to your local authorities that:
- Your income is less than your outgoings
- You have no or insufficient savings
- You’re currently unable to pay your council tax
- You don’t have any other assets that you could use to pay your council tax
You might also be able to apply for a council tax rebate if you live alone, with students or with somebody who requires your care. To find out whether or not you qualify for a council tax discount, contact your local council.
Council tax exemptions
Who is exempt from council tax? There are some circumstances in which a property will be exempt from council tax, in which case any occupants will not have to pay the annual fee.
Those that are exempt from paying council tax include:
- Properties where all residents are full-time students
- Properties where all residents are under 18
- Armed forces accommodation
- Care homes/hospitals
- People living with somebody who provides them with care due to them being elderly, disabled or ill
- People who are deemed to have a severe mental impairment
- People in prison
If you do not qualify for a council tax exemption but live with somebody who does, you could still be entitled to a discount of up to 50%.
What are the council tax bands?
Council tax bands are calculated based on the value of a property as it would have been when properties were re-valued in the past – these dates are different for England, Scotland (both April 1991) and Wales (April 2003).
Council tax bands in England and Scotland range from ‘A’ (the cheapest) to ‘H’ (the most expensive). In Wales, council tax bands range from 1 to 9.
Property valuations and tax bands are calculated differently in each country – to find out what band your property falls into, visit gov.uk.
What does council tax pay for?
The money you pay in council tax contributes directly to the upkeep of your local community. This includes things like maintaining local parks and nature spots, funding policing and fire services, providing support for those in the area who are elderly and/or vulnerable and ensuring that streets are kept clean and bins are collected frequently.
Your council tax covers 25% of any local government spending, with the remaining 75% coming from business rates and allocated funds from central government.
Can council tax increase?
Yes, there is a possibility that your council tax could increase year-on-year – in fact, bills in England rose by an average of 4.5% in April 2019.
Local councils are allowed to increase council tax by 2.99%, as well as an extra 2% if they provide social care – increases can exceed this rate, but not without the calling of a local referendum.
If you believe that you are being charged over the odds for council tax then you should get in touch with your local council – but be warned, there is a slight risk they could find that they have actually been undercharging you, meaning they could start charging you more.
How to pay council tax
When you receive your council tax bill, you will see how much you are required to pay, how that payment has been worked out and when you need to pay.
Payments are usually split over 10 months, but this can be changed to 12 months by request if you’re struggling to meet your payments.
There are a few ways in which you can pay your council tax. These include:
- Direct Debit – the easiest way to pay. Monthly payments will be taken on either the 1st, 8th, 15th or 22nd of every month.
- Online – you can pay council tax online using any debit or credit card.
- At a Post Office – pay using a magnetic stripe payment card or a Post Office payment card.
- At ‘Paypoint’, ‘Payzone’ or ‘Quickcard’ outlets – these payments must be made in cash.
- Over the phone – some councils allow you to pay your tax via telephone.
- By cheque – make it payable to your local council with your council tax account number written on the back.
- Bank transfer – some councils will let you transfer your payment directly to their bank.
For details of where to send your council tax and other potential methods of payment, visit the gov.uk website here to find your local council.
How to avoid paying council tax on an empty property
If you own a vacant second home or empty property, you may be entitled to a discount – but this will be at your local council’s discretion.
Some councils will provide discounts of up to 50% for council tax on second homes if they are furnished, while council tax on empty homes can also be reduced.
Be warned, though, that if a property is left vacant for more than 2 years, you could potentially be charged double on your council tax unless you are in the armed forces.
What happens if you don't pay council tax?
Council tax is classed as a ‘priority’ bill, meaning that if you don’t pay the correct amount of council tax by the date shown on your bill, you could face serious repercussions.
If you are more than 2 weeks late making a council tax payment, you will receive a warning letter from your local council. From this point, you will have one week to avoid any further action.
If you do not meet your required payment by then, your local council will request that you pay the rest of that year’s council tax in one instalment. Again, you will have 7 days to do this and if you don’t, you can be taken to court.
At your court hearing, you will likely be issued with a ‘liability order’ meaning that the council have permission to collect the money you owe how they see fit. This will either be by:
- Using bailiffs
- Taking money out of your monthly wage
- Taking money from your benefits package (jobseekers allowance, pension credit etc.)
If none of these are deemed possible by the council, they could potentially secure the debt against your home, make you bankrupt or even send you to prison.
I can’t pay my council tax – what should I do?
If you fear missing future council tax payments or are already behind on your bills, it is important that you get help with your debt before things begin to escalate.
Contact your local council to see if you can rearrange your instalments or get in touch with a debt advisor who can advise you on ways to better manage your finances.