How to cut your council tax with little-known trick helping thousands
As council tax bills rise for almost everyone across the UK, new figures show that many households could be unnecessarily overpaying on the monthly cost.
Thousands of people were able to challenge the government on their property’s council tax band last year, resulting in a lower council tax bill. Of the 43,820 people that asked for a revaluation last year, nearly 1,000 were able to lower their band by two places or more, official figures from the Valuation Office Agency (VOA) show.
Since 2019, some 5,591 people have managed to get the council tax band of their property lowered. In 329 of these cases, this was even by four bands or more.
Recent analysis by money expert Martin Lewis has predicted that around 400,000 households are in the wrong band – and so paying too much in council tax – and should consider making a challenge. If successful, the household will not only be due a lower bill going forward, but possibly even a massive backdated payout for all the time they were paying the wrong level of tax.
The banding system is often criticised for being outdated, as the value of properties remains based on an assessment carried out in 1991. These values have changed dramatically in recent years, with some areas seeing massive spikes in property value, and others seeing drops.
For instance, households in Greater London are now paying £444 less on average than those in the North East, despite the region having much higher average sale prices and household incomes. From this month, the average council tax bill is the lowest in the country at £1,981, while those in the North East are seeing £2,425, analysis by the Chartered Institute of Public Finance and Accountancy (CIPFA) has found.
However, revaluations are not based on today’s prices, but still based on 1991 market rates. This means that the VOA will take the physical characteristics of a property into account, rather than today’s value. Because of this, the agency can actually place the property into a higher tax band if it believes the value has become higher since it was last checked.
In very unlucky cases, a revaluation could also result in neighbouring properties being placed into a higher band. This is why Mr Lewis recommends households make a few easy checks before pressing ahead with their request.
How to challenge your council tax band
The first step is to compare the band that you’re in with nearby homes with similar characteristics (size, number of bedrooms, garden area and so on). If many of these properties are in a lower band than you, it could be worth making a claim.
But this should not be done before the second step, which is to estimate your home’s value at the time it was assessed to ensure you haven’t got it wrong. This can be done by taking the price that you bought it for and using a free online calculator to see what it would have been worth in 1991. These are offered by Nationwide through its house price index and also by Mr Lewis’s Money Saving Expert service.
Mapping this value against council tax bands to property values in 1991 will give you the clearest indication of whether you have a claim. If your band appears much higher than the value you have landed on, it could be time for a check.
“My big warning: only do this if you pass both checks,” Mr Lewis told viewers of his ITV show last year. “The fact that you’re in a higher band than your neighbours may be because they are all in too low a band.”
There are two ways to challenge the band. The first is to make a formal request to the VOA, but generally, occupants must have lived within the property for six months or less to do this.
The other way is to request an ‘informal review’ from the VOA. However, the agency does not have an obligation to carry this out, so you must provide strong evidence to them that your property is in the wrong band.
A VOA spokesperson said: “There are a number of reasons why a property’s council tax band may change.
“This includes if a property has changed, for example, it is split to form more than one property or multiple properties are merged into one, part of a property is now used for business purposes, or the local area has significantly changed.
“A property’s band may also change when it is sold if it has been improved or extended.”
