Archive: MoneySavingExpert's Money Tips Email

Martin: Council Tax is broken! It needs fixing. That may be coming, but for now...
Try my Council Tax check & challenge - 100,000s may be overpaying & due £1,000s back

Plus... are you missing out on a discount? Does your council owe you unclaimed credit?

There's a lot wrong with Council Tax - unsurprisingly, as in Eng & Scot, we still rely on a supposedly stopgap valuation done 34 years ago, to dictate what band a home's in... even though much of the country is now unrecognisable compared to then.

Yet there is some hope. A fortnight ago, while interviewing cabinet minister Pat McFadden on Good Morning Britain, I questioned him about the counter-productive Council Tax debt collection methods used by many councils (so aggressive, they'd make the banks blush!).

He replied that the Govt would soon launch a Council Tax consultation (Eng), and to my delight promised me he'd ensure preventing the rapid escalation of debt collection would go in it (currently, within 6wks, you can go from missing a monthly payment to bailiffs wanting a year's money, plus costs). I even recorded an admittedly teary video after a win on such a destructive issue.

Yet MSE is always about putting the practicals first, so I'll leave till later details of other changes I hope to see in the Council Tax consultation. First, let me run through the four crucial reductions to explore...

1) In too high a band?
2) Missing a discount? Singles, students, physical/mental health disabilities?
3) On a low income so due Council Tax Support?
3) Owed Council Tax credit back?

Like the 1960s pop charts, with Council Tax, bands are almost everything. What you pay depends on which valuation band, from A to H, you're in. Yet in England & Scotland the valuation was done back in 1991, as a stopgap to urgently set the system up, via 2nd gear valuations - ie, often estate agents driving past homes to classify them.

By 2007, it already felt outrageous that a proper full valuation hadn't yet been done (barring in Wales, which did it in 2005 - so there are likely fewer errors there), so I launched my 'check & challenge system'. Little has changed since... an estimated up to 400,000 homes are still thought to be in the wrong band.

The one bright spark is the check & challenge system has had possibly tens of thousands of successes, not only getting bands lowered, but as Lisa who emailed in Feb found out, a backdated payout too: "I challenged and heard that they had downgraded [it] from a C to a B, backdated to 1997. We've just been paid £3,240 in back pay. Our attached neighbour has been automatically reduced too. Thank you for sharing the information on this."

The Council Tax Check & Challenge System
Part I: The CHECKS

To see whether you're likely in too high a band, there are two checks. Do both, as you can't ask for your band to be lowered, only reassessed, and you don't want yours or, worse, your neighbours' band, to go up.

• Check 1: The Neighbours Check. Find whether you're in a higher band than your neighbours in very similar or preferably identical properties. Don't worry, you won't need to ask them what their band is - you can check your band and neighbours' online.
  
  
• Check 2: The Valuation Check. The first check indicates something's wrong, but is it that your band's too high, or theirs too low? This is why I developed a safety check to calculate which band you likely fit in. As bands are still, ridiculously, valued at 1991 prices it's a two-step process. First assess your home's value, then use our tool to show what it was worth in 1991 and thus which band it should be in.

Only consider a challenge if you clearly pass BOTH checks. Even if you pass The Neighbours Check, you may be in a higher band than neighbours because theirs is too low, not yours too high. Challenge and you risk seeing their band rise (which won't make you popular). 

That's why The Valuation Check is so important. While it can't be used as evidence when you challenge, it gives peace of mind. So if you've passed both checks, the work starts...

The Council Tax Check & Challenge System
Part II: The CHALLENGE

If you passed both checks, now it's time to challenge. We upgraded this part of the system six months ago, to provide more detailed help. There's far more in our Council Tax Check & Challenge guide, but let me run through it in brief...

• Step 1: Submit a formal or an informal challenge. Formal is better as it's a set process, but it's available to fewer people.
  
  - Who can formally challenge? In general, you must've lived in the property for six months or less (renters can do this too, though courtesy would indicate you notify the landlord). So everyone should look at this ASAP after moving home. (Note: This 6mth limit is something I'm asking them to consult on - see below.)
  
  You may also be able to formally challenge if the property has fundamentally changed (eg, house to flats), its use has (eg, some of it is now used for business), the local area has changed (eg, nightclub being built next door), or in Scotland also if there have been material, significant drops in property prices where you are.
  
  If you can challenge formally, while you needn't officially provide evidence, we'd strongly suggest you do, as it helps.
  
  - Can't formally challenge? In England & Wales you can do it informally. Over the years, many have got back to me saying "they won't let me challenge as I've lived there too long", yet the Valuation Office Agency (VOA) has a statutory duty to uphold the integrity of the Council Tax bands list.
  
  This means you can still submit an informal review request (use our template to help), but then it is tougher to do, and the burden is on you to provide compelling evidence that your band is wrong, to persuade the VOA to do the review.
  
  

  In Scotland? There's only the formal process, no informal review. To manage expectations, it'll be very tough if you don't fall into the 8 formal appeal reasons - for example, if you've just discovered you're in a wrong band but nowt's changed in years, it's unlikely to work. Though I'm told it isn't totally impossible with very robust evidence.

  
  
• Step 2: In England or Wales? Get your 'Property Attribute Details' (PAD). The VOA holds a Property Attribute Details document about most residential properties. It includes...
  
  
  Age or period | Type (semi-detached, end-of-terrace etc) | Floor area | Number of bedrooms, living rooms, bathrooms | Number of floors
  
  So as long as you verify you are the Council Tax-payer, you can get your free PAD from it. This can be as quick as within five days online, but in busy periods it may take a month (and this email may create more demand than normal). Once you've got it, it's important to check line-by-line that it's correct, for two reasons:
  
  - Incorrect details could be enough to see your property rebanded.
  - Knowing how your property is described will help you ensure you can spot neighbouring properties that are really similar in a lower band, which can be submitted as compelling evidence.
  
  

  In Scotland? No PAD is available, but think about similar factors for your home, as they're what really counts.

   
• Step 3: Identify neighbouring or nearby properties. You've already done a brief check, but now it's the real deal. This is the most important and time-consuming evidence-gathering step (especially if you're only able to ask for an informal review of your band).
  
  See our how to find & research similar properties info. You need to submit other addresses as evidence (capped at five in England & Wales), and they should be really similar to your own property, ie:
  
  - Same street/estate (or max 10-mile radius in very rural areas).
  - Similar style/features (can't compare semi-detached to a flat).
  - Similar age (new-build can't be compared to a Victorian property).
  - Similar size (a max difference of about 10%).
  
  And it's worth doing the work, as Alec emailed last month: "I made an informal appeal on my band G house, sparked off by MSE and an online sale ad for an identical local band F house. I provided a brief review citing that the three houses and mine were built to a standard plan. Nine months later our band was amended to an F, fully backdated to 1993 and the refund was £9,000 with an annual reduction of £600. Sincere thanks."
  
  
• Step 4: Submit your challenge. Normally easiest online, but you can also challenge by letter (and in England, phone and email too). Submit a description of your own property, the addresses of neighbouring properties in lower Council Tax bands to yours along with a brief description of each, plus any other supporting evidence you've got. To help start you off, we've a template example.

You've sent in your challenge - what next?

Hopefully you succeed, in which case, well done! Expect to have your band lowered, and a backdated rebate from when you moved into the property (or 1993, whichever's later). See backdated payout rights.

However, your challenge may be rejected. If it's a formal challenge in England, you can appeal (if you have very strong reason to think the VOA is wrong) to the Valuation Tribunal within three months (in Wales the appeal is automatically done for you). In Scotland, you've usually six months to appeal to the Local Taxation Chamber, though it may be sooner depending on the reason.

If it's an informal challenge and it's turned down, you can't appeal and that's probably it - unless you find further evidence to support a new review (in which case, you'll need to start the process again).

It's possible to get your Council Tax bill reduced in a number of other ways. If your property has been adapted for someone with a disability, you could drop a Council Tax band, though this has to be reconfirmed each year.

Then there are discounts... the full Council Tax bill is based on two or more qualifying adults living in the property. If this isn't your living arrangement, you may be overpaying. 

Our Are you due a Council Tax discount? guide has full details, but I designed this little graphic to hopefully speedily let you see whether you may be due a reduction. Whether refunds are backdate-able is a council-by-council issue.

Just to be really clear, let's run through some common scenarios...

- Only adult in household? You may be due a 25% discount.

- All full-time student household? There's no Council Tax to pay.

- Have a live-in carer? See whether you can cut your bill by 50%. As Jenny emailed last year: "I'm a carer for my brother who has a learning disability and he's lived with me and my family for over 10 years. As there are 3 adults at the property, we pay the full Council Tax bill. Having looked at the carer and Severe Mental Impairment (SMI) eligibility criteria, I wrote to the council. We've successfully reduced our Council Tax bill for the current financial year and are due a six-year refund of just over £1,600."

Separate from discounts, every council runs its own Council Tax Reduction scheme, so what you get depends on where you live, but it can cut your Council Tax bill by up to 100% (though it varies wildly by council).

Who's likely to get it? If you already qualify for a means-tested benefit, such as Universal Credit or Pension Credit, you may be due this. The most important thing to understand is you won't get it automatically - YOU MUST APPLY SEPARATELY, which is why so many miss out. See How to claim a Council Tax Reduction.

Last year, our investigation found local authorities across Britain were sitting on £141m in overpaid Council Tax, from 808,000 households.

You're MOST likely to be able to claim if you've moved out of a council area since 1993 and weren't paying by Direct Debit.