Council tax

Council Tax is a local taxation system used in England, Scotland and Wales. It is a tax on domestic property which was introduced in 1993 by the Local Government Finance Act 1992, replacing the Community Charge (popularly known as the Poll Tax). Each property is assigned one of eight bands (A to H) based on property value, and the tax is set as a fixed amount for each band. Some property is exempt from the tax, some people are exempt from the tax, while some get a discount.

In 2011 the average annual levy on a property in England was £1,196. In 2014-15 the tax raised enough money to cover 24.3% of council expenditure.

Council tax is difficult to avoid or evade and therefore has one of the highest collection rates of any tax, with in-year collection rates of 97.0% in 2014–15.

Council Tax is collected by the local authority (known as the collecting authority). However, it may consist of components (precepts) levied and redistributed to other agencies or authorities (each known as a precepting authority).

The Council tax combines both a property element (50%) and a personal element (50%). Most councils allow reductions for single occupancy which is levied at 75% of the total bill; in which case 50% is the property element and 25% the personal element.

The Valuation Tribunal Service has cleared up many previous doubts regarding the exact nature of the Council Tax and states that:

"The tax is a mix of a property tax and a personal tax. Generally, where two or more persons reside in a dwelling the full tax is payable. If one person resides in the dwelling then 75% is payable. An empty dwelling attracts only a 50% charge unless the billing authority has made a determination otherwise."

Some councils are starting to charge 150% to 200% on empty properties (2015), in order to force owners to rent out their property as a measure to combat the housing crisis in the UK.

At the bottom and middle end of the market, Council Tax is a progressive tax based on the value of the property; the higher the value of the property, the higher the amount of tax levied irrespective of the amount of inhabitants at the property (except the reduction allowed for single tenancy). However, there is only one band for properties valued (in 1991) above £320,000 and so the tax stops increasing after this point. Therefore, the tax has been criticised for being disproportionate, with those in more expensive houses not paying as much as those in smaller houses as a proportion of the value of the house and has therefore been called a "new poll tax for the poor".

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Wikipedia