Council tax is one of the biggest household bills in the UK, yet many people pay more than they need to. This comprehensive guide explains how council tax works, the discounts and exemptions available, how to challenge your band if it's wrong, and strategies to legitimately reduce your bill.
Table of Contents
- 1. What is Council Tax?
- 2. Council Tax Bands Explained
- 3. How Council Tax is Calculated
- 4. Discounts You May Be Entitled To
- 5. Council Tax Exemptions
- 6. Council Tax Reduction Scheme
- 7. Challenging Your Band
- 8. Council Tax and Students
- 9. Moving Home
- 10. Payment Options and Difficulties
- 11. Frequently Asked Questions
1. What is Council Tax?
Council tax is a local tax collected by councils to pay for local services. It was introduced in 1993 to replace the Community Charge (poll tax).
What Council Tax Pays For
- Local council services (bin collection, libraries, social care)
- Police and fire services
- Local roads and street lighting
- Parks and leisure facilities
- Planning and building control
Who Has to Pay?
You're liable for council tax if you're aged 18 or over and you:
- Own or rent a property
- Are a resident (even if you don't own or rent it)
- Live in shared accommodation as a licensee
If multiple people are liable, there's a hierarchy:
- Resident freeholder (owner)
- Resident leaseholder
- Resident tenant
- Resident who lives there
- Property owner (if no one else)
Joint Liability
If you live with a spouse, civil partner, or cohabitee, you're jointly liable. This means the council can pursue either person for the full amount if payments aren't made.
2. Council Tax Bands Explained
Properties in England and Scotland are placed into bands based on their value at a specific date. Wales has its own banding system.
England and Scotland Bands
| Band | Property Value (1 April 1991) |
|---|---|
| A | Up to £40,000 |
| B | £40,001 - £52,000 |
| C | £52,001 - £68,000 |
| D | £68,001 - £88,000 |
| E | £88,001 - £120,000 |
| F | £120,001 - £160,000 |
| G | £160,001 - £320,000 |
| H | Over £320,000 |
Wales Bands (Revaluation 2023)
Wales revalued properties in 2023 based on April 2021 values, creating 9 bands (A-I).
Historical Valuations
In England and Scotland, bands are still based on 1991 values. This means a property that was worth £60,000 in 1991 (Band C) might be worth £300,000+ today. What your property is worth now doesn't directly affect your band.
3. How Council Tax is Calculated
Each council sets the amount for Band D properties. Other bands are calculated as a proportion of Band D.
Band Proportions
| Band | Proportion of Band D | If Band D = £2,000 |
|---|---|---|
| A | 6/9 (67%) | £1,333 |
| B | 7/9 (78%) | £1,556 |
| C | 8/9 (89%) | £1,778 |
| D | 9/9 (100%) | £2,000 |
| E | 11/9 (122%) | £2,444 |
| F | 13/9 (144%) | £2,889 |
| G | 15/9 (167%) | £3,333 |
| H | 18/9 (200%) | £4,000 |
What Determines Your Bill
- Your band: Based on property value at valuation date
- Your council: Each sets different rates
- Precepts: Additional charges for police, fire, parishes
- Discounts: Any reductions you're entitled to
2025/26 Average Council Tax
Band D averages approximately £2,100-£2,200 in England, with significant variation:
- Lowest: Westminster (around £930)
- Highest: Some councils exceeding £2,400
4. Discounts You May Be Entitled To
Many people are entitled to discounts on their council tax bill. Here are the main ones:
Single Person Discount (25%)
If you're the only adult living in your property, you get 25% off. This applies if you live with:
- Only children under 18
- Only full-time students
- Only people with severe mental impairment
- Only live-in carers
Single Person Discount Value
On a typical Band D bill of £2,100, the 25% discount saves £525 per year. Many eligible people don't claim—check your eligibility!
Second Adult Rebate
If you live with another adult who's on a low income and can't contribute, you may get up to 25% off (instead of them being jointly liable).
Disability Reduction
If your home has been adapted for a disabled person, or a disabled person needs extra space, you may get your bill reduced to the band below. For Band A properties, you get a discount equivalent to dropping to a hypothetical "Band A reduced."
Qualifying features include:
- Room mainly used by the disabled person
- Additional bathroom or kitchen needed
- Wheelchair access requiring extra space
Empty Property Discounts
Rules vary by council, but discounts may be available for:
- Unfurnished properties (often 100% for first month)
- Properties undergoing major repair
- Properties where someone has moved to a care home
Empty Property Premiums
Many councils now charge premiums on long-term empty properties:
- Empty 1+ years: up to 100% premium (double normal rate)
- Empty 5+ years: up to 200% premium (triple normal rate)
- Empty 10+ years: up to 300% premium (quadruple normal rate)
5. Council Tax Exemptions
Some properties and people are completely exempt from council tax.
Exempt Properties
- Class B: Owned by a charity (empty for up to 6 months)
- Class D: Left empty by someone in prison
- Class E: Left empty by someone who's moved to a care home
- Class F: Empty after death (until probate granted + 6 months)
- Class G: Empty because occupation is prohibited by law
- Class H: Empty while awaiting minister of religion
- Class I: Left empty by someone receiving care elsewhere
- Class J: Left empty by someone caring for someone elsewhere
- Class K: Left empty by a student
- Class L: Repossessed property
- Class M: Student halls of residence
- Class N: Occupied only by students
- Class O: Armed forces accommodation
- Class U: Occupied only by severely mentally impaired people
Disregarded People
These people don't count for council tax purposes:
- Full-time students
- Under 18s
- People with severe mental impairment
- Live-in carers (not spouse/partner/parent of child under 18)
- Diplomats
- Certain apprentices and trainees
- Members of visiting forces
6. Council Tax Reduction Scheme
If you're on a low income, you may qualify for Council Tax Reduction (formerly Council Tax Benefit). This is different from discounts—it's based on your income and circumstances.
Who Can Claim?
- Low-income households
- Working people on low wages
- People receiving benefits (Universal Credit, Pension Credit, etc.)
- Both renters and homeowners
How Much Can You Get?
The amount varies by council as each sets their own scheme. Many provide:
- Up to 100% reduction for pension-age residents on low income
- Up to 75-100% for working-age residents on certain benefits
- Sliding scale based on income and circumstances
How to Claim
- Contact your local council
- Complete an application form
- Provide evidence of income and circumstances
- If receiving Universal Credit, your council may be notified automatically
Don't Assume You Won't Qualify
Many people who would qualify don't apply because they assume they earn too much. Each council has different rules, and you might be surprised. It costs nothing to apply.
7. Challenging Your Band
Around 400,000 properties in England may be in the wrong band. If you think yours is wrong, you can challenge it—potentially getting a backdated rebate.
Signs Your Band May Be Wrong
- Similar properties nearby are in lower bands
- Your property was valued incorrectly in 1991
- Physical changes affected the property's 1991 value
- The property has been divided or merged
How to Check
- Visit gov.uk/council-tax-bands to check your band
- Compare with similar properties on your street and nearby
- Research 1991 property values (if possible)
How to Challenge
- Contact the Valuation Office Agency (VOA) in England or Wales
- Explain why you believe the band is wrong
- Provide evidence of comparable properties
- The VOA will review and decide
Risk: Your Band Could Go UP
When you challenge, the VOA reviews your property afresh. They can increase your band if they think it's too low, even if you only asked for a review. Research thoroughly before challenging.
Successful Challenge Examples
- Property valued as 3-bed when it was 2-bed in 1991
- Extension valued but wasn't built until after 1991
- Area was less desirable in 1991 than neighbours
- Property had structural issues in 1991
8. Council Tax and Students
Full-time students have special council tax status. Understanding the rules is essential.
Who Counts as a Student?
- Attending a course of at least one year
- Involving at least 21 hours of study per week
- At a qualifying educational establishment
Student Households
All students: Property is exempt—no council tax to pay
One student + one non-student: 25% discount (non-student pays 75%)
Student living alone: Exempt
Getting Your Exemption
- Get a student status letter from your university
- Send it to your local council
- Apply for the exemption or discount
- Renew annually with updated letter
Summer Vacation
Student exemption continues during vacations if you're returning to study. You don't suddenly become liable during summer breaks.
9. Moving Home
When you move, council tax responsibilities change. Here's what you need to know.
Leaving Your Old Property
- Tell your old council your moving date
- Pay any outstanding council tax
- Request a final bill
- Cancel Direct Debit after final payment
Moving Into New Property
- Register with new council (if different area)
- Set up payment method
- Apply for any discounts you're entitled to
- You become liable from the day you move in
Between Properties
If you're liable for two properties temporarily:
- Ask about empty property discounts
- Check if exemptions apply (e.g., doing repairs)
- Some councils offer transitional relief
10. Payment Options and Difficulties
Payment Options
- Direct Debit: Monthly (usually 10 payments) or 12 payments
- Standing order: Set up via your bank
- Online: Card payment through council website
- PayPoint: Cash at local shops
- Phone: Card payment by telephone
Spreading Payments
Most councils bill over 10 months (April to January), giving February and March "free." You can request 12-month payments instead to spread the cost more evenly.
If You Can't Pay
- Contact your council immediately—don't ignore the problem
- Ask about payment arrangements—many councils are flexible
- Apply for Council Tax Reduction—you may be entitled
- Get free debt advice—from StepChange, Citizens Advice, or National Debtline
Council Tax is a Priority Debt
Council tax is a "priority debt" because the consequences of non-payment are severe:
- Court summons and costs
- Liability order
- Bailiff action
- Deductions from wages or benefits
- In extreme cases, imprisonment (though rare)
11. Frequently Asked Questions
I've just moved in—can I get a discount while the house is empty?
If you're furnishing an unfurnished property, some councils offer a short discount period. Ask your council as rules vary.
Do lodgers affect my discount?
If a lodger has exclusive use of part of your home and pays rent, they may count as a second adult, affecting single person discount. Lodgers with minimal facilities (just a room) may not count.
Can I claim for retrospective discounts?
Yes, in many cases. Single person discount can usually be backdated. Contact your council to claim for past periods.
What if I disagree with a penalty or summons?
You have the right to appeal. Respond promptly and gather evidence for why you believe the charge is incorrect.
Do second homes pay extra?
Many councils now charge premiums on second homes, and some have removed previous discounts. Check with the relevant council.
How often does council tax increase?
Councils set rates annually (bills usually arrive in February/March). Increases above 5% typically require a local referendum in England.
Conclusion
Council tax is a significant expense, but understanding the system helps you ensure you're not paying more than you should.
Key takeaways:
- Always check if you're entitled to discounts—especially single person discount
- Apply for Council Tax Reduction if on low income
- Compare your band with similar properties—challenge if wrong
- Students can get full exemption or significant discounts
- Tell your council when you move—immediately
- If struggling to pay, contact the council before they contact you
Take action now: check if you qualify for any discounts, compare your band with neighbours, and ensure you're not overpaying.
James Mitchell, ACCA
Chartered Accountant & Former HMRC Advisor
James is a Chartered Certified Accountant (ACCA) specialising in UK personal taxation and financial planning. With over 12 years in practice and a background as a former HMRC compliance officer, he brings authoritative insight to complex tax topics.