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Tony Levene is a renowned financial journalist, who has previously been a columnist for Guardian Money. He has written several books, including 'Investing for Dummies' and won the ABI Lifetime Achievement award and the Headline Money award.


Council tax - lots of reason but little rhyme

Early next month (April), the annual council tax demand will hit the UK's 23 million households. The bad news is most have to pay it - exemptions or discounts are few. But the good news is many bills will remain unchanged – councils are under central government pressure to hold rates.

Local government finance is – to put it nicely – opaque. Only around a quarter of local spending – education, police, social services, refuse collection, libraries – comes from council tax,which is levied by local authorities in England, Wales and Scotland (the system is different in Northern Ireland). The balance comes from central government funding...

The tax amount that's quoted from each town hall is the “band D” figure. But there are seven other bands from A to H (most expensive). There's a fixed relationship between bands. Band H is always twice band D.

Quotation MarksYou have a council tax liability whether you live in a house, flat or even a moored houseboat or mobile home.Quotation Marks

There's no link between wealth and tax bills. Some of lowest council tax bills at around £700 for band D include well-heeled central London boroughs such as Wandsworth and Westminster while well-off outer London boroughs such as Richmond upon Thames and Kingston-upon-Thames are amongst the most expensive at over £1,500 for band D.

Outside London, most of the lower cost areas are in Wales but Hartlepool and Sedgefield in North East England have some of the highest council taxes despite having low cost property and lower incomes.

The average band

So what is this average band D? In England, it's levied on a property valued between £68,001 and £88,000.

You probably don't recognise that as a typical home where you live – in some places it would barely buy a broom cupboard. Band H starts at £320,000 upwards (in England).

These unrecognisable numbers are because properties in England and Scotland are based on 1991 values – Wales was revalued in 2005.

So your council tax value has zero relationship to the current worth or to the insurance rebuild value of your home. Whatever you pay, 1991 is the reference point. You could move up a band if your home has been substantially enlarged. But improvements such as new kitchens and bathrooms or maintenance won't normally increase your tax.

Moving to a lower band is rare – converting part of the home for a physically disabled person or an area that has changed for the worse or major (and permanent) demolition - are some reasons. You can also appeal for a higher band – but who does that?

Do you have to pay it?

You have a council tax liability whether you live in a house, flat or even a moored houseboat or “mobile” home. Staying always on the move in a boat or motor caravan is one way of not paying and there are short term exemptions for empty properties. “Diplomatic premises” such as embassies are exempt, but don't believe stories about turning your home into a “council-tax free” place of worship.

Full time students, and those under 18 don't count as occupiers and there is a 25% discount for single occupiers. A low income could qualify you for housing benefit which includes council tax payments.

Finally, don't get caught by online firms which “guarantee” to axe your tax. You'll pay a lot and probably get nothing.

This article was written by Tony Levene and any opinions are his independent view on the economy or political issues.

Partnership card is a trading name of John Lewis Financial Services Limited.
John Lewis Financial Services Limited is incorporated in England with limited liability under Company Number 4645530. Registered Office: 8 Canada Square, London E14 5HQ.

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