Some experts are calling for Labour to make adjustments to council tax at October’s Budget, despite the party ruling out making changes to the bands.
Currently, the rate of council tax you pay is set by your local council based on bands based on the value of your property.
However, many believe the system is unfair, as people in small homes in some council areas end up paying more than larger ones in more expensive areas.
What band your home is in also depends on the value it had or would have had 33 years ago, rather than today.
There are some rules on how councils must bill, but there are calls for these to be reformed, and some even believe the tax should be replaced altogether.
Below are some of the changes that experts have suggested the Labour Government should make.
Add more bands on top
At the moment, English councils have to follow the below bands when setting council tax prices.
But beyond this, the actual price each council charges for properties in each band are different.
For example, in Blackpool, a Band D property is charged £2,277 per year. However, in Kensington and Chelsea, a Band H property – i.e. a more expensive home – is charged £1,946.32 per year.
Dan Neidle of Tax Policy Associates has said: “It’s indefensible that an average property in Blackpool pays more council tax than a £100m penthouse in Knightsbridge.”
He has said: “The obvious answer is to ‘uncap’ council tax so that it bears more relation to the value of the property – either by adding more bands, or applying say 0.5 per cent to all property value over £2m.”
Revaluation of council tax bands
Although Labour has appeared to rule out changes to council tax bands themselves, it is something that experts have called for.
“Values of different properties have changed very differently since council tax was introduced – on average increasing more than twice as much in London as in the North East, for example – yet the tax has not changed to reflect that,” the Institute for Fiscal Studies think-tank has previously warned.
It says this means that two households living in equally valuable properties in the same local authority (LA) can find themselves paying tax bills hundreds of pounds apart “just because their properties used to be worth different amounts in 1991”.
This is something that the Northern Powerhouse Partnership (NPP) has previously called for too.
In a letter sent to former Chancellor Jeremy Hunt earlier this year, the NPP said the Treasury should carry out a revaluation of all homes in England.
Replace council tax altogether
Another argument is to replace council tax with a different tax.
Campaign group Fairer Share has campaigned for a “property tax” on homes instead.
The group proposes scrapping council tax entirely, along with other property taxes, and switching it for a 0.48 per cent flat tax on the current value of your property. This would then only be charged on homeowners, not tenants.
Mr Neidle has suggested another solution is replacing business rates, stamp duty land tax and council tax with a “land value tax.”
“Most people would pay broadly the same tax as before, but those owning valuable land would pay a lot more,” he said, though he has conceded that this is not likely to happen.
Single person council tax discount to stay
It is expected that Rachel Reeves will not scrap the single person council tax discount in the Budget.
The discount gives people 25 per cent off their council tax bill if they live alone, reflecting the fact they benefit from fewer council services than couples or families.
Although officials had previously refused to say if the Government would keep the discount or not, the Treasury has now confirmed it will not get rid of it.
