Council Tax
Council Tax is a local taxation system used in England, Scotland and Wales. It is a tax on domestic property, which was introduced in 1993 by the Local Government Finance Act 1992, replacing the short-lived Community Charge, which in turn had replaced the domestic rates. Each property is assigned one of eight bands in England and Scotland, or nine bands in Wales, based on property value, and the tax is set as a fixed amount for each band. The higher the band, the higher the tax. Some property is exempt from the tax, and some people are exempt from the tax, while some get a discount.
In 2011, the average annual levy on a property in England was £1,196. In 2014–15, the tax raised enough money to cover 24.3% of council expenditure.
Council Tax is difficult to avoid or evade and therefore has one of the highest collection rates of any tax, with in-year collection rates of 97.0% in 2014–15.
Organisation
Council Tax is collected by the local authority. However, it may consist of components levied and redistributed to other agencies or authorities.The nature of the Council Tax
The Valuation Tribunal Service has cleared up many previous doubts regarding the exact nature of Council Tax and states that:At the bottom and middle end of the market, Council Tax is a progressive tax based on the value of the property; the higher the value of the property, the higher the amount of tax levied irrespective of the number of inhabitants at the property. However, there is only one band for properties valued above £320,000, and so the tax stops increasing after this point. Therefore, the tax has been criticised for being disproportionate, with those in more expensive houses not paying as much as those in smaller houses as a proportion of the value of the house, and has therefore been called a "new poll tax for the poor".
The valuation of the property is carried out by the Valuation Office Agency in England and Wales and by Scottish Assessors in Scotland.
Council Tax arrears
An area that is facing growing attention is the number of households that are falling into arrears with their Council Tax payments. The ordinary route for councils to chase unpaid debts is to apply to a magistrates' court for a liability order. If a liability order is granted, the council can undertake enforcement action. In 2014–15, the court and administration costs in relation to Council Tax debt increased by 17%.Collecting authorities
The collecting authorities are the councils of the districts of England, principal areas of Wales and council areas of Scotland, i.e. the lowest tier of local government aside from parishes and communities.Precepting authorities
The precepting authorities are councils from other levels of local government such as county or parish councils and other agencies. In metropolitan counties where there is no county council, the joint boards are precepting authorities. There may be precepting authorities for special purposes that cover an area as small as a few streets or as large as an entire county.| Precepting authority type | Examples |
| Strategic authorities | Greater London Authority, English county councils, combined authorities |
| Joint boards | Passenger transport executives, police authorities, fire authorities |
| Public-owned utilities | Scottish Water |
| Lowest-tier authorities | Parish councils in England, parish meetings |
| Special purpose authorities | Garden squares, national park authorities |
These all set their precepts independently. Each of the levying authorities sets a precept to be collected for households in their area. This is then divided by the number of nominal Band D properties in the authority's area to reach the Band D amount.
Liability for Council Tax
In general terms: The occupiers of a property are liable, regardless of tenure, or the owners if the property is unoccupied, except if the property is a house in multiple occupation, in which case the landlord is liable for paying the Council Tax.Calculation
Each dwelling is allocated to one of eight bands coded by letters A to H on the basis of its assumed capital value. Newly constructed properties are also assigned a nominal 1991 value.Each local authority sets a tax rate expressed as the annual levy on a Band D property inhabited by two liable adults. This decision automatically sets the amounts levied on all types of households and dwellings. The nominal Band D property total is calculated by adding together the number of properties in each band and multiplying by the band ratio. So 100 Band D properties will count as 100 nominal Band D properties, whereas 100 Band C properties will count as 89 nominal Band D properties. Each collecting authority then adds together the Band D amounts for their area to reach a total Band D Council Tax bill.
To calculate the Council Tax for a particular property, a ratio is then applied. A Band D property will pay the full amount, whereas a Band H property will pay twice that. Note there is no upper limit for band H. This means that in reality, someone who lives in a multimillion-pound mansion will pay three times more than someone in a bedsit, which falls into Band A.
Revaluation
The government had planned to revalue all properties in England in 2007, which would have been the first revaluation since 1993, but in September 2005, it was announced that the revaluation in England would be postponed until "after the next election". At the same time, the terms of reference of the Lyons Inquiry were extended and the report date pushed out to December 2006. As of 2019, the revaluation had still not taken place.In Wales, tax bills based on the property revaluations use 2003 prices issued in 2005. Because of the surge in house prices over the late 1990s and early 2000s, more than a third of properties in Wales found themselves in a band higher than under the 1991 valuation. Some properties were moved up three or even four bands with consequent large increases in the amount of Council Tax demanded. Some properties were moved into new Band I at the top of the price range. Only 8% of properties were moved down in bands.
However, a large shift of properties between bands will cause a shift in the allocation of the charge between bands, and the tax levied for each particular band will then drop, as the total amount collected will remain the same for each authority.
Between the wholesale revaluations, a major change to a property can trigger a revaluation to a new estimate of the value the property would have reached if sold in 1991. If such a change would result in an increase in value, then re-banding will only take effect when the property is sold or otherwise transferred.
Current bands
England
In England, the Council Tax bands are as follows:| Band | Value | Ratio | Ratio as % | Average |
| A | Up to £40,000 | 6/9 | 67% | £1,114 |
| B | £40,001 to £52,000 | 7/9 | 78% | £1,300 |
| C | £52,001 to £68,000 | 8/9 | 89% | £1,486 |
| D | £68,001 to £88,000 | 9/9 | 100% | £1,671 |
| E | £88,001 to £120,000 | 11/9 | 122% | £2,043 |
| F | £120,001 to £160,000 | 13/9 | 144% | £2,414 |
| G | £160,001 to £320,000 | 15/9 | 167% | £2,786 |
| H | £320,001 and above | 18/9 | 200% | £3,343 |
Wales
In Wales, the bands were re-set on 1 April 2005 by the then National Assembly for Wales, based on 2003 valuations. In addition to revising the band boundaries upwards, an extra band was added.| Band | Value | Pre-2005 value | Ratio | Ratio as % |
| A | Up to £44,000 | Up to £30,000 | 6/9 | 67% |
| B | £44,001 to £65,000 | Up to £39,000 | 7/9 | 78% |
| C | £65,001 to £91,000 | Up to £51,000 | 8/9 | 89% |
| D | £91,001 to £123,000 | Up to £66,000 | 9/9 | 100% |
| E | £123,001 to £162,000 | Up to £90,000 | 11/9 | 122% |
| F | £162,001 to £223,000 | Up to £120,000 | 13/9 | 144% |
| G | £223,001 to £324,000 | Up to £240,000 | 15/9 | 167% |
| H | £324,001 to £424,000 | £240,001 and above | 18/9 | 200% |
| I | £424,001 and above | 21/9 | 233% |
Scotland
In Scotland, the current bands are| Band | Value | Ratio | Ratio as % from April 2017 |
| A | Up to £27,000 | 6/9 | 67% |
| B | £27,001 to £35,000 | 7/9 | 78% |
| C | £35,001 to £45,000 | 8/9 | 89% |
| D | £45,001 to £58,000 | 9/9 | 100% |
| E | £58,001 to £80,000 | 131/100 | 131% |
| F | £80,001 to £106,000 | 163/100 | 163% |
| G | £106,001 to £212,000 | 49/25 | 196% |
| H | £212,001 and above | 49/20 | 245% |
Rates
Geographic variation
Due to the different make-up of each council area, Council Tax rates can vary quite a bit between different local authorities. This is less noticeable in parts of the country like Scotland, where band D rates in 2011 varied from a low of £1,024 to a high of £1,230, but the effect can be more pronounced in parts of England. For example, the 2018 rates in London had this sort of distribution:| Council area | 2018 band D rate | % of 2018 average |
| Westminster | £710.50 | 50% |
| Hammersmith & Fulham | £1,022.04 | 72% |
| Kensington & Chelsea | £1,139.41 | 80% |
| Lambeth | £1,386.27 | 98% |
| Average | £1,420.45 | 100% |
| Islington | £1,429.45 | 101% |
| Hounslow | £1,461.99 | 103% |
| Enfield | £1,555.40 | 110% |
| Croydon | £1,636.96 | 115% |
| Kingston-Upon-Thames | £1,771.69 | 125% |