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What is council tax?

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

In this article
What is council tax? Video: how council tax works Who pays council tax? How is council tax spent?
Who sets council tax rates? Map: every council tax increase in 2018-19 How are council tax bills calculated?

What is council tax?

Council tax is collected by your local council to pay for services in your community. 

Every property is put into a council tax band between A and H, based on its size, location and a few other factors.

 

The current system was introduced in 1993, replacing the Community Charge (poll tax), which in turn replaced local rates in England and Wales in 1990. The previous rates system was based on the rental value of your home - by contrast, council tax is based on the property's market value.

You can use our 2019 council tax calculator to see your local authority's rates.

 

Video: how council tax works

Our short video provides an overview of what council tax is, who needs to pay it, how it's calculated and what you can do if you think you're paying too much.

Who pays council tax?

Paying the bill is normally the responsibility of the person living in the property, either the owner-occupiers or tenants in privately rented or council accommodation.

Some properties are exempt from council tax, as are some groups of people. You may also qualify for a 25% or 50% discount on the bill, depending on who lives in the property. We explain how exemptions and reductions work in our guide on reducing your council tax bill.

You’ll be sent a bill in April each year, with the option to pay off the amount in full, or broken up in instalments. You can find out more about how billing works, and what happens if you can't pay, in our guide to paying council tax

How is council tax spent?

Money earned through council tax goes towards local services such as policing, fire services, support for the elderly and vulnerable, parks maintenance, refuse disposal and street cleaning.

Each council is responsible for allotting the funds as it sees fit.

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

Who sets council tax rates?

Council tax rates are set by more than 9,000 local authorities across the country. The billing authorities collect council tax, while precepting authorities help set the rate and have it collected on their behalf.

Your council tax bill will show which local authorities charge council tax in your area, and it's likely to be a mix of several types.

Billing authorities

Billing authorities run your local council tax system. These are the authorities you'll need to consult if you have a query about your bill.

Your billing authority is likely be the non-metropolitan district council, metropolitan district council, unitary authority, London borough or the Council of the Isles of Scilly.

Precepting authorities

Major precepting authorities include county councils, police and crime commissioner, fire and rescue authority, Greater London authority and combined authority mayors. These cover a large area, and usually include several billing authorities. 

Local precepting authorities cover a small area - like a village or town. They include town councils, parish councils and charter trustees. 

Find out more: work out your bill with our 2019 council tax calculator

Map: every council tax increase in 2018-19

The map below shows the percentage increases for council tax band D across England and Wales in the most recent year.

You can hover over your area to find out how much your bill increased. Alternatively, use our council tax calculator 2019 to work out your bill.

 

How are council tax bills 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 for a property in band H. 

All councils will prepare their budget and council tax proposals between December and February each year.

Councils can raise bills by up to 2.99% without the need of a referendum, and there's an additional 2% social care precept that they may qualify to add.

However, councils could increase rates by a higher percentage if it's agreed by a local referendum.

This means some people could see a significant rise in their council tax bills. Find out more about how council tax bands work.

If you think you're being charged too much council tax, see our guide on how to get a council tax refund.

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