What is council tax?

Council tax

What is council tax?

By Joe Elvin

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What is council tax?

Find out how council tax is calculated and which properties are exempt. 

Just over 22m dwellings in England are liable for council tax, which raises a total of almost £24bn a year. 

This goes towards local services such as policing, fire services, support for the elderly and vulnerable, parks maintenance, refuse disposal and street cleaning. 

Council tax pays for 25% of local government spending. Other money comes from business rates. These services are also funded by central government.

How property is taxed

Council tax was introduced in 1993, replacing the Community Charge (poll tax), which in turn replaced local rates in England and Wales in 1990. The old rates system was based on the rental value of your home, while council tax is based on its market value.

Council tax is payable for individual dwellings. It is normally the responsibility of owner-occupiers, or tenants in the case of rented accommodation (privately rented or council accommodation). Owners are responsible for empty properties, but can normally get a discount. 

The amount you have to pay is set by the local council. It differs according to the total amount of money the council needs to raise and the valuation band your property falls into.

Find out more: council tax bands - calculate your council tax bill 

How council tax bills are calculated

The council tax bill for each property depends on which band it's in and how much money the local authority needs to raise. In England, the charge for a property in band A is always one third of the charge made for a property in band H. 

Because house prices are differ across the country, there are marked regional variations in how many properties fall into each band. Nationally, more properties fall into band A than any other category, and just over two thirds are in bands A, B or C. Council tax increases in set proportions from band to band.

Properties exempt from council tax

All properties are placed in a council tax band, but some are exempt from council tax, either permanently or for a limited period. Properties are exempt if they are:

  • occupied entirely by full-time students
  • occupied only by people aged under 18
  • armed forces accommodation
  • unoccupied and undergoing major repair work to render the property habitable, or structural alteration (exemption ends after 12 months)
  • unoccupied and part of the estate of someone who has died (for up to six months after the grant of probate)
  • unoccupied and repossessed, taken into possession by a mortgage lender or the liable person is a trustee in bankruptcy.

Find out more: tax on property and rental income - learn how much tax you have to pay 

  • Last updated: April 2016
  • Updated by: Joe Elvin