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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 is exempt from council tax?
How is council tax spent? How are council tax bills calculated? Do you pay council tax on empty homes?

What is council tax?

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

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

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.

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.

Use our 2018 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 is 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.

This generally depends on who lives within the property or how it's being used.

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 owned by a liable person who is a trustee in bankruptcy.

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.

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. 

Council tax increases in set proportions from band to band.

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 be able to qualify for.

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

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

Do you pay council tax on empty homes?

Whether you'll be taxed on your empty property will depend on your local authority, and the reasons why your property is vacant.

Councils are able to give a discount on empty and unfurnished homes but also have the power to charge a premium if a home has been empty for a long period.

Currently, this premium is capped at 50%. From April 2018, however, local authorities will be able to charge a premium of up to 100% to encourage owners to bring their properties back into use.