Council tax accounts for more income than all other property taxes combined, but it is not the same as a property tax. It’s a tax on the right to occupy a property and not on the value of the property itself. In this blog, we look at how much you can expect to pay and what it is used for.
Council Tax
Council Tax is a local tax set by your local council, to pay for local services. You share the cost with other households in your area.
The amount you pay depends on:
- how much money your council has to spend on services; and
- how many people live in your home.
- The government sets a limit on how much each household must pay, but this is only a guideline based on property values. Some councils charge more than others.
- If you receive benefits or pension credits, your council can deduct money from what it owes you and use it to pay towards any outstanding bills.
Amount of council tax
Council Tax is a tax placed on homes. The amount of council tax that you pay is often based on the value of your home, though it can also be based upon other factors.
The amount of council tax you pay each year is based on the value of your home as recorded in the Valuation Office Agency (VOA) database. The VOA is a government organization responsible for property valuation and mapping across the UK.
The VOA uses guidelines set by central government to determine how much each property should be worth. The assessment is made by comparing similar properties within an area, so for example if there are only three flats in a building, then all three flats will have similar values recorded against them even if they are very different in size and style.
Council Tax was implemented in 1993, and replaced the old Community Charge
Council Tax is the local property tax in the UK, introduced by John Major’s Conservative government in 1993 to replace the unpopular poll tax. The system has remained largely unchanged since then, with council tax bands and rates varying across the country.
Council Tax bands are based on a property’s market value as assessed by the Valuation Office Agency, with rates set by local authorities according to their own policies. The most expensive band is H and finally M.
The lowest band – M – is applied when a property is worth less than £40k and will be paid at 0% of its actual value. For example if your house costs £25k and is in band M then you’ll only pay 0% of £25k which is £1125 per year.
The highest band – H – applies when someone owns a house worth over £320k and
Council tax is paid to your local authority
Council tax is a tax paid to your local authority, who in turn use it to provide local services. It’s based on the value of your home.
There are three bands of council tax: A, B and C. Depending on which band your property falls into, you will pay a different amount of council tax per month.
- Band A properties are worth up to £68,000 and have an annual charge of £1,316.40 (April 2019 – March 2020).
- Band B properties are worth between £68,001 and £88,000 and have an annual charge of £1,425.19 (April 2019 – March 2020).
- Band C properties are worth more than £88,000 and have an annual charge of £2,530.05 (April 2019 – March 2020).
How much you pay depends on which of 8 bands your home is in
Band A covers the cheapest properties and has a bill of £836.78 per year. Band H covers the most expensive properties and has a bill of £2,281.65 per year.
You can use our Council Tax calculator to estimate how much you’ll pay in council tax based on your property’s band and location.
If you live in a different property to the one that was last valued by the Valuation Office Agency (VOA), we will use the VOA value when we set your council tax. We’ll tell you if this happens so that you can contact us for an accurate figure
Each band has a different percentage rate
Council tax is a local tax that helps pay for local services. It’s paid on all residential properties in England and Wales, but not on commercial ones.
The amount you pay varies depending on where you live and which band your property is in. Each band has a different percentage rate that’s then used to work out how much you have to pay. Amount of council tax you pay depends on the value of your property known as its assessment. The average cost of a Band D home is £1,426.
There are eight bands: A to H, with A being the lowest-value properties and H the highest. You can check which band your home falls into here: https://www.gov.uk/council-tax-values. You can also find out how much your neighbor pays by looking up their address online at https://www.gov.uk/council-tax-online-payments
Conclusion
If you are a homeowner, you can check the ratable value of your property on the property website of your local council. The ratable value is used to determine which band your home is in for Council Tax. This is the minimum amount you will be paying – if larger changes occur in your home e.g. changes to the number of bedrooms since it was last assessed, you will still be liable for council tax on the higher rate.
