Council Tax

Council tax

What is council tax and what is its purpose?

The council tax was introduced on 1 April 1993 as the primary source of collecting income from local residents by local authorities in England. The legislation also covers Wales but the administration of council tax in Wales is a matter for the Welsh Assembly Government. The council tax replaced the community charge (or, as it was more commonly known, the 'poll tax') which itself had replaced domestic rating in April 1990.

Council tax is a local domestic property-based tax levied by billing authorities on the basis of the broad capital valuation band to which a property has been allocated. Various discounts, exemptions and reductions in valuations are provided for. A council tax benefits scheme is in operation to assist those on low incomes. The Local Government Finance Act 2012 (LGFA 2012) introduced new rules which required councils in England to design their own council tax support schemes, effective from April 2013.

References:

Local Government Finance Act 2012

The Local Government Finance Act 1992 (LGFA 1992), as amended and regulations made under it, provide the principal legislation governing the operation of council tax.

References:

Local Government Finance Act 1992

Council tax as a revenue source for local authorities

Total revenue expenditure by all local authorities in England was budgeted to be £130.9bn in 2024–25 with the majority of local authority income being funded from central government grants and centrally distributed income in the sum of £67,314m; £41,213m from council tax with the remainder financed through locally retained business rates.

References:

Local Authority Revenue Expenditure and Financing: 2024–25 Budget, England 

The average Band D council tax set by local authorities in England during 2022–23 was £1,966, which is an increase of £67 or 3.5% on the 2021–22 figure of £1,898.

The average Band D council tax set by local authorities in England for 2024–25 is £2,171, which is an increase of £106 or 5.1% on the 2023–24 figure of £2,065. This includes all precepts including adult social care and parish precepts.

From 2011–2015, council tax rises of 2% or more were subject to provisions whereby a local referendum would be triggered to approve the rise (see below).

In 2018–19, 148 out of 152 adult social care authorities used some or all of the 3% adult social care precept flexibility when setting their council tax.

In 2020–21, all adult social care authorities utilised some or all of their adult social care precept flexibility (maximum of 2%) when setting their council tax. This additional flexibility accounts for £27 of the average Band D council tax bill.

Overall, since the introduction of council tax in 1993–94, average Band D council tax bills have increased by 158%. Over the same period, the retail price index has increased by 81%.

References:

Local Authority Revenue Expenditure and Financing: 2024–25 Budget, England 

Council tax levels set by local authorities: England 2020–21 

Local Authority Revenue Expenditure and Financing: 2017–18 Budget, England 

Local Authority Revenue Expenditure and Financing: 2018–19 Budget, England 

Local Authority Revenue Expenditure and Financing: 2019–20 Budget, England  

Local Authority Revenue Expenditure and Financing: 2020–21 Budget, England 

Local Authority Revenue Expenditure and Financing: 2021–22 Budget, England 

Local Authority Revenue Expenditure and Financing: 2022–23 Budget, England 

Local Authority Revenue Expenditure and Financing: 2023–24 Budget, England 

Local Authority Revenue Expenditure and Financing: 2024–25 Budget, England 

Local Government and Police and Crime Commissioner (Coronavirus) (Postponement of Elections and Referendums) (England and Wales) 2020, SI 2020/395

Between 1993–2012, the percentage of council tax collected in-year in England improved steadily, peaking in 2012/13 when authorities collected 97.4% of council tax collectable in-year. Thereafter, collection levels have fallen:

•        2013/14 saw the national in-year collection rate for council tax fall by 0.4% to 97%. This fall affected all types of authority, with the biggest falls being in metropolitan areas which fell by 0.8% and unitary authority areas which fell by 0.6%. The fall in collection levels coincided with the abolition of Council Tax Benefit under the Welfare Reform Act 2012. The last review in August 2020 established that by 2018/19, only 36 councils continued to provide the levels of support available under the former Council Tax Benefit system

•        the most common change was to introduce a ‘minimum payment’, which requires everyone to pay at least some council tax regardless of income

Council Tax Benefit which operated between the inception of the council tax in 1993 until 1 April 2013 has been replaced with locally determined Council Tax Reduction (CTR) schemes under the Localism Act 2011 (LA 2011) and LGFA 2012. Each individual billing authority now determines the level of support available for adults of working age under 60 who are on a low income, with each scheme needing to checked locally for particular variations. As a result, the levels of support vary between areas subject to mandatory requirement set out in the Council Tax Reduction Schemes (Prescribed Requirements) (England) Regulations 2012, SI 2012/2885. Currently, 326 different schemes operate in England, 14 in Scotland and 22 in Wales. Where a local authority does not establish a scheme by 31 January in each the financial year, a default scheme set by the Secretary of State applies.

References:

Localism Act 2011

Council Tax Reduction Schemes (Prescribed Requirements) (England) Regulations 2012, SI 2012/2885

Council Tax Reduction Schemes (Default Scheme) (England) Regulations 2012, SI 2012/2886

Council Tax Reduction Schemes (Prescribed Requirements) (England) (Amendment) Regulations 2020, SI 2020/23

Council Tax Reduction Schemes (Prescribed Requirements) (England) (Amendment) Regulations 2023 (SI 2023/16) as amended by the Council Tax Reduction Schemes (Prescribed Requirements) (England) (Amendment) Regulations 2024, SI 2024/29

Billing authorities in using their allocation from the £500m hardship fund announced at the budget are to deliver relief to council tax payers in their area. The funding is for the 2020–21 financial year.

Each local authority sets a tax rate expressed as the annual levy on a band D property inhabited by two liable adults. This decision automatically sets the amounts levied on all types of households and dwellings, including caravans and houseboats. This means that each local authority will operate its own locally determined scheme which will differ from other authorities. Persons treated as not being in Great Britain must not be included in an authority's scheme or discretionary reductions (see below), as of 11 February 2020. A person is treated as not being in Great Britain if they are not habitually resident in the UK, the Channel Islands, the Isle of Man or the Republic of Ireland.

Valuation and banding

All properties are valued for council tax purposes using an assumed capital value and put into one of eight valuation bands based on their value on 1 April 1991, not their current value. The Valuation Office Agency (VOA) is responsible for the valuation of all domestic properties in England and their allocation to one of the eight bands. The valuation band is used to determine how much council tax is levied.

LGFA 1992 made no commitment to subsequent revaluations, but the Local Government Act 2003 introduced a requirement that properties would be revalued every 10 years. The Council Tax (New Valuation Lists for England) Act 2006 replaced these requirements with a power for the Secretary of State to set the date of the first revaluation and of further revaluations. The Secretary of State will specify by order the year in which each new valuation list must be compiled (ie the year in which a revaluation must take place). The new list will always be required to be compiled on 1 April in the specified year.

References:

LGFA 1992, s 7

Local Government Act 2003

Council Tax (New Valuation Lists for England) Act 2006

The following table shows the eight valuation bands and the weightings between the levels of tax levied on properties in each band.

The tax on properties in Band A is two-thirds of the tax levied on Band D properties and the Band H tax levy is twice the tax levied on Band D.

Council tax valuation bands—England:

References:

Council Tax (Situation and Valuation of Dwellings) Regulations 1992, SI 1992/550

Council Tax Manual, Practice Note 7 

Band	Value	Ratio	Ratio as %
A	up to £40,000	6/9	67%
B	£40,001 to £52,000	7/9	78%
C	£52,001 to £68,000	8/9	89%
D	£68,001 to £88,000	9/9	100%
E	£88,001 to £120,000	11/9	122%
F	£120,001 to £160,000	13/9	144%
G	£160,001 to £320,000	15/9	167%
H	£320,001 and above	18/9	200%

Appeals against council tax valuation banding

The Valuation Office Agency (VOA) can only accept as valid a proposal to alter the council tax valuation list in a limited number of circumstances, the most common of which are listed below:

References:

Valuation Office Agency 

•        person(s) who have become a new council tax payer for a property and they disagree with the valuation list entry. This is time limited to making a proposal within six months of becoming the council tax payer

•        the property needs to be added to the valuation list (eg, if it is a newly built home)

•        if the council tax payer believes there has been a material reduction in the value of the property because for example part of the property has been demolished; substantial physical changes have taken place in the area which the council taxpayer believe have reduced the value of the property since it was first banded; or adaptations have been made to the property to make it suitable for someone with a disability

•        the council tax payer receives a notice from the VOA’s Listing Officer advising they have altered the entry for that property in the council tax valuation list and the taxpayer does not agree with the alteration

•        if parts of the property have been separately banded as one (for example, flats merged into one house)

Either the property owner, ie the person liable for paying the council tax at a property, or the billing authority can make representations to the VOA setting out why they believe the banding is incorrect. There are defined time periods and grounds for appeal. The VOA must provide a decision within four months. If the issue is not satisfactorily resolved, there is a right of appeal to the Valuation Tribunal. Any appeal to the Valuation Tribunal against a decision of the VOA must be made within three months.

If the Valuation Tribunal decides that the challenge to a valuation did not follow the regulations or that there is no right to make a challenge, it may issue an invalidity notice, which will state why the appeal is invalid. Any appeal against the invalidity notice must be lodged within four weeks, and two months in the case of an appeal against a decision of the Billing Authority.

Liability for payment of council tax

Usually, one person, called the 'liable person', is liable to pay council tax and usually the person living in the property will be the liable person. Liability is determined by ‘sole or main residence’ which may be determined with reference to a range of factors ultimately leading to the answer to the question ‘Where does the person actually live?’ as explored in R (Williams v Horsham District Council. However, where no one is resident the owner(s) of the property is/are liable. In the case of properties which have been empty for one year after 1 April 2024, for more years an additional premium may be imposed. From 1 April 2019 the additional premium may be increased to a maximum of 100% of the council tax due, with higher premiums of 200% from 2020, increasing to 300% for properties empty for more than five or ten years after 1 April 2021.

References:

R (Williams) v Horsham District Council [2004] All ER (D) 167 (Jan), [2004] EWCA Civ 39

LGFA 1992, s 11B as amended by section 79 of the Levelling-up and Regeneration Act 2023

Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Act 2018

Spouses and partners who live together as owners or tenants are jointly and severally liable for paying the bill.

Where more than one person is resident, the person liable to pay is determined according to the hierarchy of ownership and tenancy set out below (the person at the top or nearest to the top of the following list is liable for the bill):

References:

LGFA 1992, s 6

•        a resident owner of the property

•        a resident in the property with a lease (this includes 'assured tenants' under the Housing Act 1988)

•        a resident with a freehold interest in the whole or any part of the dwelling

•        a resident with a leasehold interest (including an assured tenancy or assured shorthold tenancy) in the whole or any part of the dwelling which is not inferior to another such interest held by another resident

•        a resident and a statutory secure or introductory tenant (within the meaning of the Rent Act 1977 or the Rent (Agriculture) Act 1976) or a secure tenant (within the meaning of Part IV of the Housing Act 1985) of the whole or any part of the dwelling

•        a resident with a contractual licence to occupy the whole or any part of the dwelling

•        any person resident eg a squatter

If none of the above apply, liability will fall on a non-resident owner. For the purposes of council tax, a non-resident owner includes a person who has the inferior (shortest) lease granted for a term of six months or more of the whole, or any part of, the dwelling. If there is no such leaseholder, the non-resident freeholder is the owner.

In the case of a property which has been repossessed the liable person will be the person who is a mortgagee in possession of the owner's interest in the dwelling.

If a person is disregarded when calculating whether any discounts should be applied to the council tax bill, this does not affect their liability to pay the bill.

In the case of a house in multiple occupation (HMO), if the property is registered as an HMO under the Housing Act 2004, it is treated as a single dwelling with one council tax bill payable by the owner. Prior to 1 December 2023, there was a wide discretion afforded to the listing officer with a decision to aggregate or disaggregate properties only challengeable in the High Court.

References:

Council Tax (Chargeable Dwellings and Liability for Owners) (Amendment) (England) Regulations 2023, SI 2023/1175

The owners of care homes, rather than the residents, are liable for council tax. In addition, if the care home contains a self-contained unit of accommodation for the owner, that unit is treated as a separate dwelling.

If a dwelling is occupied by a number of people, some of whom are severely mentally impaired and some are not, only those who are not severely mentally impaired can be held liable to pay the tax.

Properties occupied by full-time students are exempt from joint and several liability and no one under the age of 18 can be held responsible for paying council tax. For clarification on what constitutes a programme of full time study for the purposes of the exemption, see News Analysis: When students’ circumstances qualify them for council tax exemption (Jagoo v Bristol City Council).

References:

Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Act 2018

LGFA 1992

Jagoo v Bristol City Council [2019] EWCA Civ 19

Discounts and exemptions

The full council tax bill assumes that there are two or more adults living in a dwelling. If only one adult lives in the property, the council tax bill is reduced by 25%. In addition there are certain groups of residents who can be disregarded altogether when counting the number of adults in the household. They are:

•        people in prison or some other form of detention (except for non-payment of council tax or a fine)

•        people who are severely mentally impaired

•        18 and 19-year-olds for whom child benefit is paid

•        full-time students on a qualifying course of education and student nurses

•        dwellings owned and solely occupied by students who are pursuing a course of full-time education elsewhere

•        apprentices

•        people on youth training schemes

•        people whose main residence is in a hospital

•        people who are being looked after in a residential care home

•        people residing in hostels or night shelters

•        carers working for low pay, usually for charities

•        people caring for someone with a disability who is not their spouse, partner or a child under 18

•        members of religious communities, eg monks and nuns

•        members of visiting forces and certain international institutions

•        non-British spouses of students who under immigration rules are not allowed to work in the UK or claim benefits

•        people with diplomatic immunity

The Council Tax (Exempt Dwellings) Order 1992, SI 1992/558 (as amended) set out 23 classes of exemptions of dwellings. The list below broadly sets out which types of properties may qualify as being exempt and where they will be exempt only for a specified length of time. Unless specified in each class, there is no period of time for how long the exemption can last.

References:

Council Tax (Exempt Dwellings) Order 1992, SI 1992/558

As originally enacted, the Council Tax (Exempt Dwellings) Order 1992, SI 1992/558 provided the following categories of exempt dwelling:

•        Class A—a vacant dwelling where major repair works or structural alterations are required, underway or recently complete (up to 12 months)—abolished from 1 April 2013, see below

•        Class B—an unoccupied dwelling owned by a charity (up to six months)

•        Class C—a vacant dwelling (ie empty and substantially unfurnished) (up to six months)—now abolished, see below

•        Class D—a dwelling left unoccupied by people who are detained in prison (except for non-payment of a fine or council tax). The dwelling must have been their main home immediately before they went to prison

•        Class E—an unoccupied dwelling that was previously the sole or main residence of a person who has moved into a hospital or care home

•        Class F—unoccupied dwellings that form part of the estate of a person who has died and remains unoccupied (up to six months after the grant of probate or letters of administration)

•        Class G—an unoccupied dwelling where occupation is prohibited by law (however, squatters can still be charged normal rates if they are found to be residing there)

•        Class H—unoccupied clergy dwellings

•        Class I—an unoccupied dwelling that was previously the sole or main residence of a person who is the owner or tenant and has moved to receive personal care

•        Class J—an unoccupied dwelling that was previously the sole or main residence of a person who is the owner or tenant and has moved in order to provide personal care to another person

•        Class K—an unoccupied dwelling left empty by students or those who became students within six weeks of leaving

•        Class L—an unoccupied dwelling that has been taken into possession by a mortgage lender—now amended, see below

•        Class M—a hall of residence provided predominantly for the accommodation of students

•        Class N—a dwelling that is occupied only by students, the foreign spouses of students, or school and college leavers

•        Class O—armed forces accommodation (although the contributions in lieu of council tax are paid in respect of them)

•        Class P—a dwelling where at least one person who would otherwise be liable has a relevant association with a Visiting Force

•        Class Q—an unoccupied dwelling where the person who would otherwise be liable is a trustee in bankruptcy

•        Class R—empty caravan pitches or boat moorings not in use

•        Class S—a dwelling occupied only by a person, or persons, aged under 18

•        Class T—a dwelling which forms part of a single property which includes another dwelling and may not be let separately from that dwelling, without a breach of planning control

•        Class U—a dwelling occupied only by a person, or persons, who is or are severely mentally impaired who would otherwise be liable to pay council tax, or only by one or more severely mentally impaired persons and one or more students, students' foreign spouses and school and college leavers

•        Class V—a dwelling in which at least one person who would otherwise be liable is a diplomat

•        Class W—an annex or self-contained part of a property which is occupied by a dependent relative of the residents of the adjoining property. The dependent relative must be aged over 65, or be severely mentally impaired or substantially and permanently disabled

LGFA 2012 included the framework for allowing local council’s discretion with regard to certain types of council tax discounts and introduced these changes into law from 1 April 2013. There is no maximum period for an exemption to apply other than that prescribed by the class. Units in a hall of residence under Class M may fall to be assessed separately.

References:

LGFA 2012

Mr Z T v London Borough of Lewisham [2018] App No: 5690M202173/084C 1 February 2018 

R (on the application of Howard Gardens Manco Ltd) v Lucy Formela-Osboner [2024] EWHC 1112 (Admin)

The main changes were to:

•        abolish Class A and Class C exemptions and replace them with a discount set at a level determined by the local council including a power to impose an extra premium in respect of any dwelling empty for two or more years

•        allow councils at their discretion to reduce or remove the discounts in respect of Class L exemptions in respect of unoccupied dwellings taken into possession by a mortgage lender

•        allow councils at their discretion to charge the full amount of council tax in respect of second homes

•        allow councils to levy an empty homes premium in respect of dwellings which have been left empty for two years or more (subject to certain exceptions). The empty homes premium gives councils’ the discretion to charge up to an extra 50% council tax if the home has been empty or unfurnished for two years or more (unless it is an annex or the council tax payer is in the armed forces)

•        allow payment of council tax instalments over twelve months rather than ten (as was previously the case)

•        allow billing authorities to publish the 'information to be supplied with demand notices' online but with a duty to supply it in hard copy to any council tax payer requesting it

•        promote the take up of voluntary electronic billing through the removal of regulatory obstacles

Any challenge against a council’s decision on the entitlement to a discount or exemption must be made to the valuation tribunal which the Court of Appeal confirmed had exclusive jurisdiction. See News Analysis: How to challenge council tax liability—County Court held to lack jurisdiction (Lone v Hounslow London Borough).

References:

Lone v Hounslow London Borough [2019] EWCA Civ 2206 (17 December 2019)

Relief for disability

If there is an adult or child who is substantially and permanently disabled living at the property and the dwelling contains a room which is adapted to meet their needs, the council tax for the property may be reduced. The reduction is made by charging council tax on one valuation band lower than the band of the property.

For example, if the property is in Band D the council tax will be calculated as if it were in Band C. If the property falls into Band A, a reduction of one-ninth of a Band D property may apply.

The property must be the disabled person's main home to qualify for the reduction and that property has to have at least one of the following:

References:

Citizen’s Advice Bureau Guide 

•        an extra kitchen or bathroom to meet the needs of the disabled person

•        any other room (except a toilet) which is mainly used by a disabled person to meet their needs

•        enough indoor space for a disabled person to use their wheelchair

Appeals regarding liability, discounts, exemptions and calculations as to amounts of tax

Appeals should initially be made to the billing authority. If the appeal is not successful, there is a right of appeal to the Valuation Tribunal. Liability for payment is not suspended during the appeal process but a magistrates’ court may grant an adjournment and another enforcement process may be suspended or stayed while an appeal is taking place. Any claim for a refund of overpaid tax should be specifically pleaded if a case proceeds to the Valuation Tribunal in a request for a specific order of repayment, enforceable as a County Court judgment.

References:

Valuation Tribunal for England (Council Tax and Rating Appeals) (Procedure) Regulations 2009, SI 2009/2269, as amended by the Valuation Tribunal for England (Council Tax and Rating Appeals) (Procedure) (Amendment) Regulations 2017, SI 2017/156

Billing and precepting authorities

The Corporation of London, London boroughs, metropolitan districts, shire districts and unitary councils are responsible for the billing and collection of council tax.

Billing authorities calculate the amount to be raised through council tax after aggregating their own budgetary requirements with those of precepting bodies, including the police, fire, joint authorities, the Environment Agency, land drainage boards and parish councils.

Council tax 'excessive increases'

Under LGFA 1992, s 52ZB (inserted by LA 2011, Sch 5 local authorities), fire authorities, and Police and Crime Commissioners are required to determine whether the amount of council tax they plan to raise is 'excessive'. A set of principles defined by the Secretary of State and approved by the House of Commons is used by authorities to decide if the amount to be raised is excessive. Any authority proposing an excessive increase in council tax must hold a local referendum and obtain a 'yes' vote before implementing the increase. An authority proposing an excessive increase must also make substitute calculations based on a non-excessive council tax level. This takes effect if the excessive increase is rejected in the referendum.

References:

The Referendums Relating to Council Tax Increases (Principles) (England) Report 2016/2017 

Currently no principles apply to Parish and Town Council precepts but the Government has stated this may be reviewed in the future.

Referendums are required to be organised by billing authorities and there is provision for the recovery of expenses where the referendum is held on behalf of a precepting authority.

The Local Audit and Accountability Act 2014 (LAAA 2014) extends the referendum provisions introduced in LA 2011 to include levying bodies when setting the limit by which council tax can be raised before a council needs to hold a referendum.

References:

Local Audit and Accountability Act 2014, s 41

Referendum requirements

The legislation sets a duty on billing authorities, major precepting authorities, and local precepting authorities to determine whether their relevant basic amount of council tax for a financial year is 'excessive' based on a set of principles agreed each year by the Secretary of State.

References:

Local authority (Referendums relating to Council Tax Increases) Regulations 2012, SI 2012/460 (as amended)

Council tax: local referendums House of Commons Library January 2016 

A local referendum must be held and won before a relevant authority can increase council tax by more than the amount specified in the principles. An authority proposing to set an excessive council tax level is required to make substitute calculations which will take effect if the proposed amount of council tax is rejected in the referendum. The substitute council tax level must be below the amount which is considered excessive under the principles.

Entitlement to vote is based on inclusion in the register of electors and on eligibility to vote in local government elections for a particular area. A simple majority of those voting will determine the outcome. Where multiple referendums are held on behalf of a major precepting authority, a majority of persons voting in all of the referendums taken together will determine the outcome.

There is a duty placed on the authority triggering a referendum to publish a detailed notice of referendum within its local area. Once the notice has been published an authority may publish an additional statement setting out the reasons for the 'excessive' increase, and the likely impact if its council tax increase is not approved. This statement is subject to a campaign expenses limit for the referendum and must be published no later than 28 days before the poll. There are restrictions placed on the publication of other promotional material on or behalf of the authority.

Referendums in respect of any given financial year must usually be held no later than the first Thursday in May for that financial year or such other date specified by the Secretary of State.

In the event that a referendum rejects an increase, the billing authority would be able to issue new bills, offer refunds at the end of the year or allow credits against liability for the following year, although individual council tax payers would be entitled to a refund on demand.

A local authority for an area which has been reorganised may continue to set council tax for its predecessor areas. Modifications ensure that the amount of the adult social care precept and that cash and percentage changes in the level of that precept charged from year to year are accurately presented on council tax bills. 

Calculation of council tax

The total sum to be raised in each billing authority area is divided by the number of Band D-equivalent properties in the area to give the Band D charge. Applying the proportions shown in the section above 'valuation and banding' produces the council tax for each of the other council tax bands. The council tax level may also vary across the area, reflecting that some precepts may only apply to parts of the area. Where appropriate, the various discounts, exemptions, reductions and council tax benefits are then applied in order to calculate the bills for individual dwellings.

Where liability changes during the financial year, council tax is apportioned on a daily basis.

Billing and recovery

Demand notices are issued annually and must be accompanied by the information specified by Council Tax (Demand Notices) (England) Regulations 2011, SI 2011/3038, which are amended regularly to require inclusion of information such as the amendments contained in the Council Tax (Demand Notices) (England) (Amendment) Regulations 2020, SI 2020/21, the Council Tax (Demand Notices and Reduction Schemes) (England) (Amendment) Regulations 2022, SI 2022/127, and the Council Tax and Non-Domestic Rating (Demand Notices) (England) (Amendment) Regulations 2023, SI 2023/13, requiring the provision of information about council tax expenditure on adult social care functions.

References:

Council Tax and Non-Domestic Rating (Demand Notices) (England) Regulations 2003, SI 2003/2613

Council Tax (Demand Notices) (Wales) Regulations 1993, SI 1993/255

Council Tax (Demand Notices) (England)Regulations 2009, SI 2009/3193

Council Tax (Demand Notices) (England) Regulations 2010, SI 2010/2990

Council Tax (Demand Notices) (England) Regulations 2011, SI 2011/3038

Council Tax (Demand Notices) (England) (Amendment) Regulations 2020, SI 2020/21

Council Tax (Demand Notices and Reduction Schemes) (England) (Amendment) Regulations 2022, SI 2022/127

Council Tax and Non-Domestic Rating (Demand Notices) (England) (Amendment) Regulations 2023, SI 2023/13

Council Tax and Non-Domestic Rating (Demand Notices) (England) (Amendment) Regulations 2020, SI 2020/133

Separate demand notices must also be issued for each period of liability. The billing, collection and recovery of unpaid council tax is governed by the Council Tax (Administration and Enforcement) Regulations 1992, SI 1992/613.

References:

Council Tax (Administration and Enforcement) Regulations 1992, SI 1992/613

Since 5 November 2003, billing authorities have had the power to serve council tax demands electronically under the Council Tax and Non-Domestic Rating (Electronic Communications) (England) Order 2003, SI 2003/2604.

References:

Council Tax and Non-Domestic Rating (Electronic Communications) (England) Order 2003, SI 2003/2604

Local Government (Structural and Boundary Changes) (Amendment) Regulations 2018, SI 2018/1296

The person liable for payment of council tax must be sent a reminder and be given notice prior to recovery action commencing.

Recovery action is through the issue of a summons and obtaining a liability order through the magistrates' courts. Remedies include payment orders, attachment of earnings orders, seizure and sale of goods following the issue of a warrant, registered charges on property and, in extreme cases, imprisonment for up to three months. Imprisonment is not a criminal matter but a civil sanction. A warrant of commitment may be issued to compel payment from a debtor who has displayed either wilful refusal or culpable neglect which has led to the making of a liability order in respect of non-payment. The Court must enquire into the means of the debtor on the day in determining whether a warrant should be issued or suspended on terms. In a case of inability to pay the magistrates’ court may remit the debt.

Applications to the magistrates' courts by billing authorities are invariably accompanied by a request for costs.

Only certified bailiffs are able to remove a debtor's goods for the purposes of recovering council tax debts.

For in depth coverage, see Practice Note: Council Tax Enforcement.

Discretionary reductions

Since 2003, authorities in England and Wales have the power to reduce or remit sums in council tax debt in cases of hardship and to write off debts where there is no realistic prospect of recovery of money owed or for any other reason the billing authority deems appropriate. See: Morgan v Warwick District Council [2015] VTE RVR 224 (not reported by LexisNexis®).

References:

LGFA 1992, s 13A(1)(c)

Collection fund

Section 89 of the Local Government Finance Act 1988 (as amended by LGFA 1992) requires English billing authorities to maintain a separate fund (the collection fund) for the collection and distribution of amounts due in respect council tax and national non-domestic rates (NNDR). Welsh authorities do not maintain a collection fund.

References:

Local Government Finance Act 1988, s 89

Accounts and Audit Regulations 2015, SI 2015/234 require that a relevant authority, other than a health service body, must prepare a statement of accounts in respect of each financial year. Where a collection fund is relevant to that authority's functions, the statement must include a collection fund statement. Note this only applies to Category 1 authorities, as defined in the Accounts and Audit Regulations 2015.

References:

Accounts and Audit Regulations 2015, SI 2015/234, reg 7(2)(b)

LGFA 1988

LGFA 1992

LGFA 2012

LAAA 2014, s 32

The transactions accounted for in the collection fund are prescribed by statutory arrangements, which specify the amounts that are to be paid into and out of the fund and the transfers that must be made to or from a council’s general fund. Within the collection fund, balances for council tax and non-domestic rates are maintained separately.

Collection funds are maintained under LGFA 1988, s 89 (as amended, particularly by LGFA 1992 and LGFA 2012). LGFA 1988, s 90 specifies amounts to be paid into and out of the Fund. Sections 97 and 98 deal with transfers between the collection fund and the general fund. These provisions for payments and transfers are supported by a number of detailed requirements, the most substantial of which are:

•        specifications and directions made by the Secretary of State under LGFA 1988, ss 90 and 98 respectively

•        LGFA 1988, Sch 7

•        the Local Authorities (Funds) (England) Regulations 1992, SI 1992/2428 (as amended)

•        the Non-Domestic Rates (Rates Retention) Regulations 2013, SI 2013/452 (as amended by the Non-Domestic Rating (Rates Retention and Levy and Safety Net) (Amendment) Regulations 2018, SI 2018/463 and the Non-Domestic Rating (Transitional Protection Payments and Rates Retention) (Coronavirus) (Amendment) Regulations 2020, SI 2020/449)

LAAA 2014, s 32 provides powers to the Secretary of State to make provision for relevant authorities, other than health service bodies, about the form and content of accounting records and statements and related controls and reporting.

References:

LAAA 2014, s 32, supported by the Accounts and Audit Regulations 2015, SI 2015/234

Prior to making regulations under this section the Secretary of State must consult with the Comptroller and Auditor General; representatives of relevant authorities, and the recognised supervisory bodies.