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Council Tax Band Reviews Ahead of Government Budget

'Council tax bill' on a piece of paper on an open dotted notebook, with a calculator and pens
Author: Samuel Beckingham
Updated: Jan 31, 2024
4 minutes read

Ahead of the chancellor’s March Budget, Northern Powerhouse Partnership (NPP) is asking Jeremy Hunt to reevaluate how council tax bands are calculated. According to the NPP, the fixation on old valuations isn’t a fair system.

Did you sell your property last year? You may have earned a profit of £100,000.

How Council Tax Bands Are Calculated

Currently, the way council tax bands work is based on a property’s value at least a couple of decades ago. In England and Scotland, this is 1991. In Wales, it’s 2003, and in Northern Ireland it’s 2005. Under this system, someone living in an inexpensive property could potentially be paying more council tax than someone in a multi-million pound property.

“Under the current system, a homeowner in Hartlepool living in a house worth £150,000 is paying more than £200 a year more in council tax than someone in Westminster in a property worth £8m.”

Northern Powerhouse Partnership – on data by Fairer Share

Strapped for Cash

There have been at least six councils across the UK that have declared bankruptcy since 2021. With more reliance on local funding, especially through council tax, there is even more strain now on local authorities to provide sufficient services. An unfair system that is in desperate need of overhaul will not be enough to level the playing field.

Even with the recently announced £500 million emergency fund for councils in 2025, much more money needs to be available by any other means. Some councils have relatively low council tax bands but a greater need for essential funds, which an overhaul in the system could go some way towards providing for.

NPP Proposals for Council Tax Bands

By actively encouraging the Treasury to reevaluate all homes in England before the next general election, the NPP is positioning itself as a forward thinker with local authority interest at heart. However, the government has no plans for a nationwide review of council tax bands.

As an additional measure, the NPP suggested the introduction of three new higher bands for expensive properties bought by overseas buyers. These would start on properties worth £2 million and above. Even just implementing this single measure could help councils operate services at normal levels, as the money could be redistributed nationwide.

How Council Tax Bands Were Calculated

Widely known as ‘second gear valuations’, when the new council tax band system was coming into effect, the government needed help to put all properties into bands. Outsourcing to estate agents and other bodies, teams would “valuate” up to 400 properties a day from the comfort of their cars, without even getting out of them.

Properties were given an estimated value, even if they hadn’t even been set foot in by the valuator. As the process needed to be conducted quickly, this is why so many properties have been in incorrect council tax bands, without having been revaluated since.

What You Can Currently Do

If you believe your council tax band is not correct, there’s a way you can challenge this. You can write to the Valuation Office Agency and ask them to review your council tax band. You will need to supply evidence based on why you think this is incorrect.

Reviewing your council tax band has the power to lower your future payments, as well as give you a backdated payout to 1993, or when you moved in. The more properties that challenge council tax banding, the more pressure is put on the government to perform a nationwide reevaluation, which can then give local councils access to vital funds.

Even if more properties are put onto lower bands, your council could still benefit. The more lower council tax bands there are in an area, the bigger subsidies the local authority receives from central government.