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Council tax helps pay for local council services in your area. Think libraries, bin collections and road maintenance.
Each year, your local council should send you your annual bill and payment plan, and this should also include a breakdown of how the council budget has been allocated.
Most people pay their yearly council tax bill over ten instalments, but with council tax rising across the country, many households will be worried about the cost.
Read on to learn about what council tax is, how it works and – crucially – how you may be able to take advantage of various council tax discounts and exemptions to drive down your bill.
How much is council tax?
Unfortunately, there’s no simple answer to the question of how much council tax costs because it’s not a flat tax. It’s possible that you and your neighbour don’t even pay the same amount, and both of your bills could be miles off from someone living elsewhere in the UK.
Generally speaking, how much council tax you pay depends on a few different factors. Chief among these are the council tax rates set by your specific council and the value of your home.
Council tax is charged per household – not per person. If you live alone, you will be solely responsible for the property’s council tax bill. If you live with a partner, it’s on both of you to sort it out.
Across most of the UK, councils use bands to work out how much each household ought to be paying.
These bands are based on property values, with the idea being that those in the most expensive houses should contribute the most towards filling the council’s coffers.
The cost of council tax doesn’t change depending on whether you own the house you live in or rent it. However, if you don’t rent a whole house or flat, but just rent a room in an HMO – a house in multiple occupation – then it is usually the landlord’s responsibility to pay the tax.
And if you pay for a room in someone else’s home, then your live-in landlord has responsibility for paying council tax, which will usually be reflected in the amount of rent they charge you.
Council tax is set by local authorities with oversight from the central government, meaning councils effectively have the power to adjust their own council tax rates. This has resulted in quite large council tax disparities across the country.
Based on the average cost of Band D council tax, you can find the lowest council tax bills in Wandsworth, where the typical cost is £969 per year. The UK’s most expensive average council tax, in Rutland, stands at £2,543 per year.
Clearly, council tax can be a significant bill for many households, so it’s important to set up payments as soon as you move in. Otherwise, the risk is that you fall behind and need to pay a bigger bill to catch up later.
If you’re struggling to pay your bills, then don’t just ignore council tax. Get in touch with your council to explain why you’re struggling and they can help by arranging a repayment plan.
What are council tax bands?
In most parts of the UK, the amount of council tax you pay is worked out based on what band your property is in. This is important because you need to understand the band your home is in so you can check you’re not overpaying.
The system varies depending on where in the UK your property is. England and Scotland both have a system of eight bands, labelled A to H, which are based on the value of the property back in 1991.
In Wales, there are nine bands but these are based on the value of each property in 2003, because that’s when they were revalued.
Homes built after those valuation dates are assigned council tax bands by special officials from the VOA – the Valuation Office Agency.
With all those systems, the further down the alphabet the letter your house is in, the more you pay.
Northern Ireland is different to the rest of the UK. Known as ‘rates’ rather than council tax, your bill is based on the value of your property.
What council tax band am I?
You can check which band you’re in by looking at your council tax bill.
If you don’t have that handy, then go online. In England and Wales, you can easily find your council tax band by entering your postcode. In Scotland, you can check using the Scottish Assessors Association website.
What if I’m in the wrong council tax band?
Occasionally, a home or even a whole street ends up in the wrong council tax band, sometimes because of an error in the original valuation. If you think your home is in the wrong band, then you can ask for it to be reviewed and you may be moved to a lower rate.
If that happens, then you will also receive a repayment of the extra council tax you’ve been paying, backdated to whenever you moved in.
There is a guide to challenging your band available on the Gov.uk website. You’ll see that you can only challenge your band if you’ve been in the property for no longer than six months. There are only very specific circumstances where you can challenge a bill after six months, including a change in either your property or its use, or a change to the local area.
An important thing to remember is that when you ask for your council tax band to be reviewed, they won’t just consider whether it should go down. They will also consider whether it should go up.
So only ask for a review if you genuinely believe you should be in a lower band and you have evidence to back that up.
How do I pay my council tax?
When you move into a new home, you’ll need to contact your local council and register for council tax.
The council will then send you a council tax bill. They should also tell you how to pay and when each payment is due.
You can set up a direct debit or make payments online as and when they’re due.
Alternatively,you may be able to make cash payments at banks or post offices.
Can I spread the cost of council tax over 12 months?
Most households pay their council tax bill over 10 months, with a two-month break each year in February and March. For these two months, no council tax payments will be due.
If you don’t want to pay this way, you might find it more affordable to spread your council tax over 12 months. Contact your local council if this option would make your payments more manageable.
What happens if I miss a council tax payment?
If there is a chance you will struggle to make a payment then it’s really important you contact your council as soon as you can.
They may be able to offer some help or guidance, or to increase your future payments to offset the one you miss.
But if you simply ignore the letters from your council, then you might end up with a demand for the full year’s council tax to be settled within seven days. If you don’t make that payment, then your council will usually start legal action to get the money.
Council tax discounts, exemptions and reductions
If you are on a low income or you’re on certain benefits, then you might qualify for a discount on your bill known as a council tax reduction or council tax support, which replaced the old system of council tax benefit.
Different councils have different schemes and criteria, so if you think you need help then contact yours to ask what support is available.
Some people are exempt from paying council tax. Some common reasons you might qualify for support, exemptions or reductions in your council tax include:
Council tax exemption for students: If everyone in your household is a full-time student, then nobody in the property has to pay council tax. To qualify for that exemption, courses must be at least one year in length and involve 21 hours of study a week as a minimum.
Council tax single person discount: If you live on your own, then you can apply for a 25% discount on your bill.
Council tax discount for people who have just left care: Care-leavers may also get a reduction in council tax or may not even have to pay it all.
Council tax reduction for disabled people: If you need a larger home because of a disability, then you may be able to get assigned a low band and pay a lower rate as a result.
Again, get in touch with your council to talk through what extra help you might be entitled to.
Image source: Getty Images
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