What is council tax and how does it work?

Council tax is a tax on households levied by local councils, with the money collected used to pay for local services such as street cleaners, police, public libraries and schools.

Any property that could be considered a 'dwelling' is liable for council tax - from houses to houseboats (though in the case of mobile homes and boats, this is only true if they are a 'primary residence').

Did you know

Council tax bills also vary widely from region to region, since each council sets its own level of council tax.

The amount of council tax you pay compared with other local residents is dependent on the value of your home. Every home is put into one of eight council tax 'bands' running from A to H, with bills reflecting the banding.

In the years since council tax was introduced, average bills have more than doubled.

Why might your home be in the wrong band?

Most homes in England and Scotland were put into council tax bands in 1993, and have not been reassessed since. What's more, the valuations on which these banding decisions were based were actually carried out two years earlier still.

This means that over the last 20+ years it is entirely possible that your home's value has changed, meaning it should have moved changed bands too. However, it will not have been reflected in any calculation of your council tax bills.

Official figures suggest that one in 20 homes are in too high a council tax band, whilst some reports suggest that the figure is far higher - arguing that the original valuations were poorly carried out and wildly inaccurate in some cases.

How much extra might you be paying?

The exact figure depends on how much council tax is charged by your council. However, for instance, if your home is currently in band E when it should be in band D, you could be paying over 20% too much.

What should you do about it?

Do not go rushing to contact the council demanding a refund - it is possible your home could be in too low a band, in which case you would end up paying more.

Instead it is vital that you do some research to work out whether any claim you make for 'rebanding' or a rebate might be successful. Use our checklist to investigate both your and your neighbours' homes:

  1. 1.

    Check which Council Tax band your home is in: you can do this quite easily via the GOV.UK website

  2. 2.

    Check your home's history: your home may have been re-banded (since 1993), e.g. if it was knocked down and rebuilt at any stage

  3. 3.

    Check the banding of nearby properties: particularly looking at homes that are the same age and size

You can search the GOV.UK website for any address to find out which council tax band it is in; if you find that your neighbours' homes are in lower bands than your own, you may have grounds for an appeal.

Do your homework

It is also worth finding out your home's value in 1991 when the tax bands were first set: if it was in the wrong band originally, it will have stayed there since.

You can use a house price calculator like the one on the Nationwide's website to get an estimated value of your house in 1991 and compare this with the tax bands on the GOV.UK website - but be aware that this will just be an estimate, and may not be the same value used by the VOA.

Even if you find that your home is in a higher band than nearby properties, consider if there is a valid reason for this before you go any further. For example,

  • Is your home really comparable with your neighbours?

  • Has it been extended or structurally improved?

Any major work that will have increased your property's value could work against you in an appeal.

Correct band?

It is also worth considering the possibility of your home being in the correct band, whilst your neighbour's homes are in lower bands than they should be (if you appeal and this turns out to be the case, your neighbours may end up paying more).

However, there might be a clear reason why your home is in the wrong band, compared with your neighbours and this will give you a strong case for appeal.

One example is if part of your property has been demolished or physical changes to the area have affected its value.

In summary, it is important that you get your facts straight before making an appeal.

The key is checking that neighbours in very similar or identical properties are all in a lower band to you AND that your house seems to have been put into a band that is too high.

How do you appeal if your band is wrong?

First of all you should contact your local Valuation Officer and discuss your situation.

Your Valuation Office is obliged to consider your reasons for suspecting that your home is wrongly banded.

You may get an answer straight away, or the Valuation Office may undertake a more detailed 'band review'.

In most cases, you will be informed of the outcome of this review in writing.

Make a formal challenge

Alternatively is you feel that your property banding can be challenged based on one of the 'official reasons' set out on the VOA's website - you can submit an 'Online Proposal' to have your home's banding reassessed.

To do this, you will need to search for your property and then click on the 'Make a formal challenge' link. Remember that you must cite one of the 'official reasons' as part of your proposal.

What happens if you are successful?

If you are successful you will be eligible for a reduction in council tax and a rebate of any overpayments you have already made.

What happens if you are unsuccessful?

If you are not happy with the outcome of your appeal, you can appeal to an independent valuations tribunal.

How else can you lower your council tax bills?

Yes, there are a range of discounts and exemptions available, provided that you fit with a range of household criteria. They include:

  • If you are the only adult living in your property

  • If you are a student, living with other students or with only one adult in full time work

  • If you are disabled

  • If the property is empty

Finally, if your income is below a certain level, you may be eligible for Council Tax Benefit.