How to check if you're overpaying council tax as millions face major hikes
Six councils have been granted permission to impose inflation-busting tax increases, but many residents could already be paying far too much.
Millions of households are facing council tax rises beyond the normal limit this year in a bid to stabilise the finances of town halls facing bankruptcy.
Six councils, serving more than two million people in total, have been granted permission to increase council tax beyond the established annual threshold of 5%.
Bradford Council will be able to increase the levy by a further 5%, while Windsor and Maidenhead Council and Newham Council can all increase bills by 4%. Meanwhile Birmingham, Somerset and Trafford have been granted a further 2.5% uplift beyond the threshold.
Explaining that the decision was "not taken lightly" by the Westminster government, deputy prime minister Angela Rayner said: "We recognise the importance of limited increases in helping to prevent these councils falling further into financial distress - but we have been clear this must be balanced with the interests of taxpayers," she said.
Rayner said only a limited number of requests from councils were agreed upon, and in "all cases" not to the full amount requested.
In her statement, Rayner said councils will have access to more than £69 billion in funding this year - a 6.8% increase in cash terms compared to 2024-25. The settlement provides more than £2 billion in direct grant funding above revenue received from council tax.
Local authorities have long been asking for more financial support from the Westminster government, with councils in England facing a funding gap of £4bn over the next two years, according to the Local Government Association.
However, according to MoneySavingExpert.com, as many as 400,000 households are already paying more than they should due to homes being put in the wrong council tax bands back in the early 90s.
Could your home be one of them? Here, Yahoo News explains how to find out and what you can do about it.
What is council tax?
Council tax is a taxation system in England, Scotland and Wales and is a tax on domestic property.
It was introduced in 1993 following the Local Government Finance Act 1992, and replaced the controversial Poll Tax, which itself replaced domestic rates.
What council tax band are you in?
Council tax is charged on domestic properties, which are split into different bands, the cheapest being A and the most expensive being H.
The bands are based on what the home might have sold for in April 1991:
Band A - up to £40,000 0
Band B - £40,001 to £52,000
Band C - £52,001 to £68,000
Band D - £68,001 to £88,000
Band E - £88,001 to £120,000
Band F - £120,001 to £160,000
Band G - £160,001 to £320,000
Band H - more than £320,000
When you register to pay council tax, your local authority should let you know what band your home is in, but you can also check here on the government's website.
How many people are in the wrong council tax band?
According to MoneySavingExpert, as many as 400,000 homes are in the wrong council tax band due to being banded wrongly.
When the banding system was introduced in 1991, there weren't enough resources to get detailed information on each individual property in time for the system's launch, the consumer champion website says.
The government enlisted the help of estate agents and others, but still there wasn't enough time, prompting many estate agents to drive down whole streets banding properties "at a glance", in what came to be known as "second-gear valuations".
MoneySavingExpert told Yahoo News that some people could also be overpaying council tax because they paid in advance and then moved away, or because they aren't claiming the discounts available to them, such as those for single people living alone.
Benjamin Elks, grassroots development manager of the TaxPayers' Alliance, said: "Councils should ensure that they're being fair and thorough by collecting the correct amount of council tax."
How to check if you are in the right band
If someone believes their property is in a higher, incorrect band, they should assess their property's 1991 value.
You can use this tool on the Gov.uk website to check your band, and crucially, to check if it is different to your neighbours living in similar or identical properties.
If your neighbours are in a lower band than you, it could either mean the whole street needs to be rebanded, or that you need to challenge your own home's banding.
MoneySavingExpert advises people to check what their homes were worth in 1991.
If you bought your home after that time, you can take its price and date of sale and compare it with similar neighbouring properties on websites such as Zoopla, Rightmove and Nethouseprices, which show prices from 2000.
Then you can find the most recent sale price of a similar property on your street. Once you have these details, you can use a calculator on MoneySavingExpert's site to find an estimate price for 1991.
When using comparable properties to support your Council Tax band challenge, make sure to check that:
✅ the properties are on the same street, estate or within the same village 🏘️
Learn more about the other details we take into account:https://t.co/hFuzd3FHPd pic.twitter.com/7bZNwVslPL— Valuation Office Agency (@VOAgovuk) January 28, 2025
How to launch a challenge
If you’ve been paying council tax on your property for less than six months, or your band has been changed in the past six months, then you can make a challenge known as a "proposal".
This is classified as a formal challenge and means the government is required by law to carry out a review of your band.
If you think your band is wrong and you've been paying council tax on your property for more than six months, you can request an "informal" band review.
"The same legal rights do not apply, and we'll only take your request forward if you provide strong evidence that your band is wrong," the government says. "This is usually the addresses of up to five comparable properties or sales information."
Residents can also challenge their council tax bands if there has been a change that affects their property, for example, if it has been split into multiple homes, or if it's been left in a state of disrepair with structural problems.
People living in England and Wales can challenge their council tax bands here on the Gov.uk website.
In Scotland, you have to submit your challenge to an assessor based in your local Valuation Joint Board or council, which you can find here, while in Northern Ireland, rates, the equivalent of council tax, you can apply for a domestic valuation review.
