Council Tax Break

What Is Council Tax & Council Tax Break?
What Are Council Tax Bands?
Who Pays Council Tax?
How To Pay Council Tax Bill?

What Is Council Tax & Council Tax Break?

Council tax is a system of mandatory annual payments collected by the local authorities. It is a tax on all domestic properties across the UK (some property is exempt). The council collects the tax to maintain the local services such as schools, roads, garbage collection, social care, libraries and street lighting (in Scotland the services also include water and sewerage).

To make sure all of your property is accounted for, your books need to be in order. If you need any help with that, check out our accounting services.

Some groups of people do not have to pay council tax or could get a discount.

If you set up a 10-month payment plan with your council, it means you pay your council tax in 10 instalments, and you can have a break for two months each year. Council tax is rather expensive, and for those two months you can get a breather. Those months are completely payment free. Usually, they are February and March.

This is a traditional scheme, but it depends on what you choose with your local council. The cost can be spread over 11 or 12 months. If you want to check whether you are entitled to a two-month council tax break, you should check your direct debit plan and your bill.

You can also check your council tax bill to know:

  • how much your annual payment is;
  • how that amount has been used up;
  • the dates you have to pay.

What Are Council Tax Bands?

Council tax bands determine the amount of council tax you pay. Council tax bands are based on the value of the property at a specific point in time.

In England, your band is calculated according to what your property value would have been on 1 April 1991. If back in 1991, your property didn't exist, its value will be calculated based on comparison to similar properties in the area.

There are eight bands in England:

  • Band A - up to £40,000
  • Band B - £40,000—£52,000
  • Band C - £52,001—£68,000
  • Band D - £68,001—£88,000
  • Band E - £88,001—£120,000
  • Band F - £120,001—£160,000
  • Band G - £160,001—£320,000
  • Band H - over £320,000

Here are the Scotland bands:

  • Band A - up to £27,000
  • Band B - £27,000—£35,000
  • Band C - £35,001—£45,000
  • Band D - £45,001—£58,000
  • Band E - £58,001—£80,000
  • Band F - £80,001—£106,000
  • Band G - £106,001—£212,000
  • Band H - over £212,000

Northern Ireland property is not subject to the council tax, but there is a rates system based on the market value of properties. Domestic rates are calculated based on the value of your property on 1 January 2005. Bills and payments are managed by the Land and Property Services (LPS) office.

The value of your property may change and be put in a different band, if:

  • the part of your property was demolished and was not rebuilt;
  • you rebuilt your property and created two or more separate units (such as an annexe);
  • you split a single property into separate flats;
  • you combined separate flats into a single property;
  • you start or stop working from home;
  • there are changes to your property made by the previous owner;
  • something in your local area changes significantly (e.g. there is a new road);
  • a property similar to yours in your area was put in a different band.

You should ask the Valuation Office Agency (VOA) to check if any changes to your property affect your council tax band.

Who Pays Council Tax?

Most people older than 18 who own or rent a property have to pay council tax.

Usually, the person living in a property is the one who pays council tax. However, there are a few cases when the council tax has to be paid by the owner. Those include:

  • empty properties
  • nursing homes
  • houses of religious communities
  • residences of ministers of religion
  • houses in multiple occupations where rooms are let individually
  • residences of staff who live in houses which are also occupied by an employer

Couples living together are mutually responsible for paying the council tax bill, even if there is only one name on the bill. A full council tax bill is based on two or more adults living in a home.

If you live on your own or no other people are living in your home counted as adults, you get a 25% discount. If no people living in your home counted as adults, including you, you get a 50% discount. If everyone living in your home is a full-time student, you don't have to pay any council tax.

In case you still can't pay your council tax, your council may give you a one-off discount. You need to apply for council tax reduction.

How To Pay Council Tax Bill?

Council tax bills are to be sent out in April for the financial year ahead.

Usually, you have to pay in 10 instalments, but you have the right to ask to pay in 12 instalments instead. There is also might be a reduction if the total bill is paid all at once, at the beginning of the year.

Councils prefer to get paid by direct debit, but you can also pay by cash, cheque or debit card. Some accept credit card payments.

There are severe consequences if you don’t pay your council tax bill. The first two times, you will be sent a reminder notice. If you fail to pay it for the third time, you'll get a final notice saying you have to pay the whole year's council tax and you have seven days to do so. If you still don't pay they have the right to forcefully recover the money from your wages, from your benefits or via bailiffs, and in the worst case you could be sentenced for up to three months in prison and be forced to make an arrangement to pay your debt.

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