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The first 90 days: Council Tax

Continuing with our series on the First 90 Days, we are answering the most important (and occasionally forgotten about) questions for those moving into a new home.

So far we have addressed sorting out utilities and the essential moving-in checklist, and this time we are discussing council tax.

The council are the local management for your area. They provide local services and facilities and their budget and agenda will change depending on where you live. If you have moved to a new borough, it’s worth looking up who your elected official is and what council tax band you fall under.

What is council tax?

Council tax is simply the local taxation collected by the authorities – specifically, a tax on domestic property. The money collected from council tax is used to pay for local services. These range from repairs, waste disposal, local emergency services, and pretty much every public service in your borough. You should be paying council tax if you are over 18 and rent or own property in the UK.

You will need to contact your local council to let them know you have moved into the area. They will then send you a bill and explanation of your tax band. Not every property has to pay council tax, however, so you would need to ask your council about that, too. You can find your local council by entering your postcode here.

What is a tax band and which am I?

The Valuation Office Agency define what tax bands different households are applicable for. Houses are placed in their tax band based on their value from 1991 in England and Scotland or 2003 for Wales. If you’re not sure what the property was worth in 1991, don’t fret. You can use Nationwide’s House Price Calculator to work it out. Just put ‘2018’ in Valuation Year 1 and ‘1991’ in Valuation Year 2, then add the value of your new house and pick your region. For instance, if you’re in Greater London, the percentage change is -83.71%, so a £500,000 property would have been worth £127,010. Based on the different tax bands in England (which you can find here), that would put the property in tax band F.

So how much should I be paying?

The amount you pay for council tax doesn’t just depend on the value of your property, but also your borough. If we look at the example above and assume the property is located in Tower Hamlets in London, then we can use the Which? Council Tax Calculator to find out the actual annual figure that needs to be paid. In Tower Hamlets, a Band F property needs to pay £1,850p/a. Meanwhile, if the property is based on Southwark, a Band F property would mean paying £1,921p/a. Make sure you’ve checked how much you think you should be paying and compared it to what the council have told/will tell you that you should pay. If the figures differ, give the council a call to find out their reasoning.

If you think you should be paying less or if you believe you should be in a different tax band, you can contact the Valuation Office Agency to appeal to get your property revalued. It’s possible that the property has dropped in value since 1991, such as if it was previously a large, several-story property and has since been converted into flats. Or, the value of your property in 1991 could have been incorrect – this would be evidenced by neighbouring similar properties being in a lower tax band. Do your research by checking the 1991 valuations of yours and nearby properties before calling the Valuation Office Agency, though – the last thing you want is for it to turn out that you actually belong in a higher tax band!

How do I pay my council tax?

Until the mid/late 1960s, people would need to pay their council tax with cash or cheque. Many councils no longer accept cheque payments, but cash payments are still available by using ‘Paypoint’, ‘Payzone’, or ‘Quickcards’ at post offices, banks, newsagents, and convenience stores. However, the most popular and convenient method is online via direct debit.

Enter your postcode into this link to find out more about your payment options and how to set up a direct debit online.

Can I get any discounts?

There are a few council tax discounts and exemptions available for those that qualify. These include:

  • Single person discount – If you are the only person living in your home over the age of 18, then you could get a discount of 25% on your council tax
  • Disability discount – You do not need to pay council tax if you are severely mentally impaired or care for someone who is (who is not a spouse, partner, or child under 18).
  • Disabled Band Reduction Scheme – If you live in a property that is larger than you would need if you or another occupant were not disabled, then you might be entitled to a discount. You would need to prove that you have either an extra room needed for a disabled person or extra space inside, such as space to allow for a wheelchair. The property must be the main home of at least one disabled person, but that person does not need to be the person responsible for paying the council tax.
  • Student discount – Students are also exempt from paying council tax, as long as they are full-time students (i.e. at least a one-year course with 21 hours of study per week). If you are renting and a housemate is a student, then you still need to pay council tax, even if they don’t. If the property is owned, then all the residents need to be full-time students for council tax exemption. Students studying for A-level qualifications who are under 20 also don’t need to pay council tax as long as the course is at least three months and involves at least 12 hours study per week.
  • Second home discounts – This discount is at the discretion of your local council, but second homes can get a council tax discounts. Fully-furnished second properties or holiday homes can receive a discount of up to 50%.

If a property is empty, then it may qualify for a discount. However, if it has been left empty for two years or more then the council could increase the tax by 50% (unless it’s an annexe or you’re in the armed forces). In certain circumstances, empty properties don’t need to pay any council tax. These include homes:

  • of someone in prison (whose crime was not failing to pay a fine or council tax)
  • of someone who has been moved into a care home or hospital
  • that have been repossessed
  • that can’t be lived in by law (e.g. derelict)
  • that have been compulsorily purchased and are to be demolished

What if I don’t like the current council?

The local council officials are chosen by election, so if you have any problems with the way things are being run you can have your say in the local elections. Since you are moving into a new area, it’s important that you register to vote as soon as possible. This isn’t just so you can have your say, but also because it helps with your credit rating. You’ll want to keep a good credit rating when the time comes to remortgage for a better deal.

 

That’s all the important stuff to know about council tax when you’re moving into a new property. If you are a first-time buyer and have not been renting previously, then it might seem like a very inconvenient expense, but it’s what keeps the local services running and repairs ongoing, so it’s definitely better with than without! Keep up with our First 90 Days series by following our Twitter and Facebook pages. If you have any questions about mortgages or first-time mortgages, don’t hesitate to get in touch via our contact page!