Council Tax Explained

What is council tax?

Council tax is a tax on domestic property collected by your local council to help pay for local services. It is charged per household rather than per person, so the bill is for the property, and the people living there are responsible for paying it. The money funds things most people use every week, including waste collection, local roads, libraries, social care, and a share goes to the police and fire and rescue services. The amount is not based on your income or savings, it is based on the value of your home through a banding system, combined with the rates your council and other local bodies set for the year. Because each council sets its own rates, two identical homes in different parts of the country can have quite different bills.

How council tax bands work

Every home is placed in a valuation band, from Band A at the lowest to Band H at the highest in England and Scotland, and Band A to I in Wales. In England, the band is based on what the property was worth on 1 April 1991, not its current market value, which surprises many people. So even a recently built home is given a band based on what it would have been worth on that 1991 date. Band A covers the lowest property values and the top band the highest, with the bands in between rising in steps. The higher the band, the higher the proportion of the council's standard charge you pay, so in England a Band H home pays three times the basic charge of a Band A home in the same area. Scotland uses a similar banding system also based on 1991 values, while Wales uses 2003 values, and both use their own band proportions rather than the English ones.

How your bill is calculated

Your bill starts from the rate your council sets for a Band D property, which is the benchmark band used across the country. Every other band is then charged as a fixed proportion of that Band D figure. In England, Band A pays two thirds of the Band D rate, Band D pays the full rate, and the higher bands pay progressively more, up to Band H which pays twice the Band D rate. On top of the basic council charge, your bill can include separate amounts for adult social care and for the police and fire services, and in some areas a small parish or town council charge. All of these are added together to produce the total annual bill, which you can usually choose to pay over 10 or 12 monthly instalments.

The band proportions are set in law and are stable from year to year, but the Band D cash amount is not. Each billing authority sets its own Band D figure and revises it every April, and the precepts added on top differ by area, so two identical homes in the same band can have very different bills. Any national or regional average Band D figure you see quoted is a summary of many different councils, not the charge in your council, so treat it as a rough estimate only and use the figure on your own bill or your council's published rates when the exact amount matters. You can apply the band proportions to a local Band D amount with our council tax calculator.

Who has to pay

There is usually one council tax bill per home, and the law sets out who is responsible through a list that works in order. A resident owner who lives in the property comes first, then a resident tenant, then a resident who lives there, and only if no one lives there does the owner become liable. Where two or more people share the same status, for example joint owners or joint tenants, they are jointly responsible for the whole bill. Married couples and partners living together are also jointly responsible. People aged 18 or over are generally counted, but some people are not counted at all when working out the bill, which can lead to a discount, as explained next.

Discounts and people who are not counted

The best known discount is the single person discount. If you are the only adult living in a property, you get 25 percent off your bill. The bill assumes two adults live in a home, so when certain people are not counted, the discount applies. People who are not counted, sometimes called disregarded, include full time students, student nurses, apprentices on low pay, people who are severely mentally impaired, live-in carers caring for someone who is not their partner, and 18 and 19 year olds in full time education. Being disregarded is not the same as the property being exempt. In England, where every adult in the home is disregarded and no property exemption applies, the general rule is a 50 percent discount, so there is still a bill to pay. A property exemption is a separate outcome with its own conditions, and the best known example is a home occupied only by full time students, which is normally exempt so nothing is charged.

Whether a course counts as full time for council tax has a specific definition, so not everyone who is studying qualifies, and the same applies to the apprentice, carer and severe mental impairment categories. Your council decides who is disregarded, whether an exemption applies, and what the final bill is, so apply to them with evidence rather than assuming a category fits. Wales and Scotland run their own rules on discounts and exemptions, so check the position with your own council rather than reading the England position across.

Exemptions, empty homes, and support

Some properties pay no council tax at all. Exempt homes include those occupied only by full time students, properties left empty because the person has gone into hospital or a care home, and a home left empty because the person who lived there has died, for a period while the estate is settled. By contrast, councils can charge extra on homes left empty and unfurnished for a long time, so leaving a property empty can increase rather than reduce the bill. If you are on a low income or claim certain benefits, you may be able to get Council Tax Reduction, also called Council Tax Support, which can cut your bill significantly, and people with certain disabilities may qualify for a reduction that effectively charges them at a lower band. These schemes are run by your local council, so you apply directly to them.

If you think your band is wrong

Because bands are based on 1991 values, some homes are in the wrong band, and you can challenge it. In England and Wales this is done through the Valuation Office Agency, and in Scotland through the local assessor. Before challenging, it is worth checking the bands of similar neighbouring properties, which are public, to see whether yours is out of line, and looking at what your home was worth around 1991 if you can. Be aware that a challenge can result in your band going down, staying the same, or in some cases going up, and a successful reduction can also affect neighbouring properties. If your band is lowered, you can usually get a refund of the overpaid tax going back to when you moved in or when the banding error began. Never pay a company that offers to do this for you for a fee, as you can challenge your band directly for free.

How council tax fits your household budget

Council tax is one of the larger fixed bills most households pay, so it is worth including in any budgeting plan alongside rent or mortgage, energy, and other essentials. Paying over 12 months instead of the default 10 can smooth the cost across the year, and checking you are getting every discount and any support you qualify for is one of the simplest ways to cut a regular outgoing. To see how it sits within your wider spending, our budget calculator helps you plan your monthly outgoings, and our guide to household budgeting covers practical ways to manage regular bills.