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Council Tax is charged by every local authority across England and Wales. The purpose of council tax is to cover the cost of local services, such as refuse collection. Council tax tends to be a yearly payment but most local authorities break this down into 10 monthly amounts, with a two month holiday from council tax payments every year. The amount that households pay depends on a wide range of different factors, including individual circumstances, the value of the property occupied and the requirements that the council has for income to fund its services.
Everyone pays council tax. However, depending on your individual situation, you may be able to reduce the amount that you’re required to pay. There are specific circumstances in which the cost of council tax will be reduced, including where:
The purpose of council tax payments is to provide a local authority with funds to put towards delivering local services for the community. This covers practical services, such as local police and fire forces, rubbish collection, transport and road maintenance and the administration of events such as births, deaths and marriages. It also provides funding for more community focused services, such as libraries and leisure and education services, as well as the upkeep of local parks and sporting facilities.
It operates on a series of bands, from A to H. A is the cheapest council tax band. Generally, the more expensive the property is, the more council tax will be charged to the person occupying it. If you think that your property is in the wrong band it’s worth getting it reviewed – some 400,000 households in England and Scotland are in the wrong council tax band. The amount of council tax due also varies by location – in England the cheapest average council tax is in Wandsworth, London while the most expensive is in Elmbridge Surrey.
Council tax payments can cause serious problems for local residents, particularly as everyone is required to pay council tax and non-payment can create debt with serious consequences. If you’re more than 14 days late paying council tax then you will get a letter from the local authority reminding you to pay it. After that you’ll have seven days to make the payment and, if you don’t, the council can ask that you pay the entire year’s council tax up front instead of continuing with the monthly repayments. If you’re not able to then you may be taken to court, which can result in court-appointed bailiffs coming to your home, or repayments being taken straight from wages or benefits.
Local authority funding cuts by central government – of 60% – have meant that council tax has increased for many people. For example, for those living in band D homes it has increased by an average of £78, or 4.7% in 2019. This is the second largest increase in the last decade – it’s only lower than the 5.1% increase in 2018. Part of the rise has been attributed to the option that councils now have to apply a 2% increase to cover the cost of adult social care. New research suggests that 97% of councils are planning to increase the costs of council tax for local residents in 2019. At the same time, local services are set to be slashed in many locations, from children’s care services to repairing potholes in the road.
It’s difficult to establish definitively where money is being most efficiently used but bigger bills don’t necessarily mean that local people are benefiting from better services. The IMPOWER INDEX measures councils on the basis of productivity, using factors such as waste and recycling, health and social care interface and local housing and homelessness. According to this index, Leicestershire and East Riding of Yorkshire have been the most productive councils for the past two years. None of the London councils, where tax bills are often high, feature in the Top 10 of the productivity index.
Council tax is an essential consideration if you live in the UK. How much you need to pay will depend on a number of factors, including location and property type.
Alex Hartley is a keen advocate of improving personal finance skills. She's worked at Solution Loans since 2014 and written hundreds of articles about how people can manage their money better. Her interest in personal finance goes way back to...Read about Alex Hartley