Council Tax Explained: What It Is, Who Pays & How It Works
What Is Council Tax?
Council tax is an annual property-based tax charged by local authorities in England, Scotland, and Wales to fund essential public services. Introduced in April 1993, it replaced the unpopular Community Charge ("poll tax"). The amount you pay depends on your property's valuation band and your local council's rate.
Northern Ireland operates a different system called domestic rates rather than council tax.
Northern Ireland operates a different system called domestic rates rather than council tax.
| Quick Facts | Details |
|---|---|
| System | Property-based local tax |
| Introduced | 1 April 1993 |
| Collection Rate | 97% (one of UK's highest) |
| Average Band D 2025-26 (England) | £2,280 |
| Total Revenue (England) | £44.1 billion |
Who Has to Pay Council Tax?
Generally, adults aged 18 or over who own or rent a property must pay council tax. The occupier is usually responsible, but in some cases, the owner pays:
Occupiers pay when:
- Living in a property they own
- Renting a house or flat
- Multiple adults share liability (jointly and severally liable)
Owners pay when:
- Property is a house in multiple occupation (HMO)
- Property is empty or unfurnished
- All occupants are under 18
- All occupants are full-time students
- Property is a care home, hospital, or hostel
Other special cases:
- Second homes (occupied or empty)
- Holiday lets (depending on rental period and availability)
- People in prison or detention
- Armed forces or visiting forces accommodation
- Severely mentally impaired residents
- Annexes or dependent relatives
- Diplomats or religious community members
- Hierarchy of liability (owner, tenant, licensee, other residents)
If multiple adults live together, they are "jointly and severally liable," meaning each person is responsible for the full amount.
How Council Tax Funds Local Services
Council tax provides 24-52% of local authority budgets, with the remainder from government grants, business rates, and service fees. The money funds:
| Service | Budget Share |
|---|---|
| Adult Social Care | 30-35% |
| Children's Services | 25-30% |
| Waste Collection | 10-15% |
| Police (via precept) | Separate charge |
| Fire Services (via precept) | Separate charge |
| Highways & Transport | 8-12% |
| Libraries & Leisure | 2-3% |
Your council tax bill includes charges from multiple authorities:
- Billing authority (district/borough/unitary council) collects the tax
- Precepting authorities (county council, police, fire, parish councils) each set their portion
The adult social care precept is an additional 2% charge many councils levy specifically for social care costs, raising £654 million across England in 2025-26.
The adult social care precept is an additional 2% charge many councils levy specifically for social care costs, raising £654 million across England in 2025-26.
What's Included in Your Bill
Your annual council tax bill shows:
- Property address and valuation band (A-H or A-I)
- Each authority's charge (district, county, police, fire, parish)
- Total amount due
- Payment schedule (typically 10 monthly instalments from April-January)
- Any discounts applied (such as single person 25% discount)
Band D is used as the baseline for comparisons. Other bands pay fixed proportions: Band A pays 67% of Band D, Band H pays 200% of Band D.
What Happens If You Don't Pay?
Council tax is a priority debt. Non-payment triggers rapid enforcement:
- Reminder notice (7 days to pay missed instalment)
- Final notice (demanding full year's balance)
- Court summons for liability order (£50-130 costs added)
- Enforcement action: Bailiffs, earnings attachment, or benefit deductions
Bailiff fees start at £75 and can exceed £400 for enforcement stages. Over 3.1 million UK households were in council tax arrears in 2024, with total arrears exceeding £5.5 billion.
In extreme cases of willful refusal to pay, magistrates can impose up to 3 months imprisonment, though this is rare (approximately 120 cases between 2020-2024).
If you're struggling to pay, contact your council immediately. Support options include Council Tax Reduction schemes (3.7 million households receive this), payment plans, or hardship funds.
In extreme cases of willful refusal to pay, magistrates can impose up to 3 months imprisonment, though this is rare (approximately 120 cases between 2020-2024).
If you're struggling to pay, contact your council immediately. Support options include Council Tax Reduction schemes (3.7 million households receive this), payment plans, or hardship funds.
Frequently Asked Questions
Who sets council tax bands in the UK?
Council tax bands are set by the Valuation Office Agency (VOA) in England and Wales, and by the Scottish Assessors Association in Scotland. Local councils then use these bands to calculate bills.
How were council tax bands originally determined?
Bands were originally based on the estimated market value of properties on 1 April 1991 (England and Scotland) or 1 April 2003 (Wales). The valuations were grouped into bands from A upwards.
Can I challenge or appeal my council tax band?
Yes. You can request a band review if you believe your property is incorrectly valued. You must provide evidence, such as similar nearby properties in lower bands.
How long does a council tax band appeal take?
It varies. A simple review may take a few weeks, while a formal appeal can take several months, depending on the evidence required and processing timelines.
If my neighbour is in a lower band, can I request a review?
Yes. A difference in banding between similar properties can be grounds to ask the VOA or assessor to review, but it does not guarantee your band will be reduced.
What happens to council tax when I move house?
You must inform the council when moving. Your old property’s council tax will stop on your move-out date, and your new council will start billing you at the new address from your move-in date.
Who pays council tax in a shared house (HMO)?
In most HMOs, the landlord is responsible for council tax. However, if the property is not considered an HMO for council tax purposes, the residents may be jointly liable. The council determines liability based on the property’s setup.