The simple way to check if you’re overpaying council tax

Households across the UK are facing the prospect of a significant hike in council tax bills in the coming weeks.

Cash-strapped councils are set to raise bills in April in a bid to overcome increasing funding gaps, despite households in England now paying an average of £1,770 a year in council tax, according to government figures.

However, according to consumer group 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 1990s.

Here’s how to check if you’re overpaying – and what to do about it.

What is council tax?

Council tax is a local tax in England, Scotland and Wales that helps fund local services provided by councils, based on domestic property.

Introduced in 1993, following the Local Government Finance Act 1992, it is paid by all households, and the amount depends on the value of your home and the local council’s financial needs.

Council tax pays for services like education and schools, adult social care, waste collection and recycling, roads and transport maintenance, amongst other things. Social care makes up the majority of council tax spending in most cases.

The amount we pay for council tax could increase further too as the Local Government Association estimates that local councils will face a funding gap of more than £8bn by 2028/29 without adequate central government support.

Council tax is calculated by splitting all domestic properties into eight bands, which go from the cheapest A, all the way through to the most expensive H, based on what the home might have sold for in April 1991.

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.

Why are people in the wrong council tax band?

According to MoneySavingExpert, over 800,000 households are owed council tax totalling £141m across 349 local authority areas in England, Scotland and Wales.

There are various reasons why you might be owed money from your council, including forgetting to cancel a payment or being due a retrospective discount if your old home has been re-banded.

The consumer champion group, headed by Martin Lewis, says that up to 400,000 households may be overpaying after having their houses incorrectly banded in 1991.

At the time, there weren’t enough resources to get detailed information on each individual property in time for the system’s launch, leading to “second-gear valuations” made by estate agents.

Often these calculations were made without detailed information and based on estate agents assessing the whole street and allocating each property a band with just a glance.

Consumer group Which? say that in 2023-24, 10,530 people in England and Wales successfully challenged their council tax band, resulting in a reduction.

John O’Connell, Chief Executive of the TaxPayers’ Alliance, a think tank which scrutinises public spending, told Yahoo News: “Long-term cost challenges like adult social care need long-term reform so that local taxpayers don’t have their pockets raided every single year.”

“When tax is high enough as it is, families could do without the stress of seeing a bill that’s incorrectly large. What’s more, precious time is needed to query the charges, leaving taxpayers in limbo. Councils must brush up their admin to make their systems more cost-effective and, importantly, accurate.”

How to check if you are in the right band?

Your council tax band is publicly available online, so you can check it any time on the Gov.uk website.

If you believe you are in a higher incorrect band, then the first step is to check your property’s 1991 value.

You can also compare your band to your neighbours on the Gov.uk website, and if your neighbours are in a lower band, your property, and potentially the entire street, may need to be rebranded.

If you bought your home after 1991, you can take its price and date of sale and compare it with similar neighbouring properties on websites such as Zoopla or Rightmove.

Then you can find the most recent sale price of a similar property on your street. Once you have these details, you can use the MoneySavingExpert’s calculator to find an estimated price.

How to launch a challenge?

If you have been paying council tax on your property for less than six months, or your band has changed in the past six months, you can make a formal challenge, known as a “proposal”.

By law, the government must then carry out a review of your band.

If you have been paying council tax for more than six months and believe your band is incorrect, you can request an informal band review.

The government says these requests are only considered if you provide strong evidence, such as the addresses of up to five comparable properties or relevant sales information.

Residents can also challenge their council tax bands if there has been a change affecting their property, for example, if it has been split into multiple homes, or if it has fallen into disrepair with structural problems.

People in England and Wales can make a challenge via the Gov.uk website, while in Scotland, challenges must be submitted to a local assessor through the Valuation Joint Board or council.

How much is your council tax going to go up?

The government is likely to release a full set of council tax increases in the coming weeks, though you can check your local council website for any updates for the area you live in.

However, we already know that seven local authorities will be allowed to increase council tax more than the 5% threshold without triggering a referendum after central government approval.

Worcestershire County Council, Shropshire Council and North Somerset Council are likely to increase bills by 9%.

Authorities in Trafford, Warrington and Windsor and Maidenhead have been allowed to raise their share of council tax by up to 7.5%.

And Bournemouth, Christchurch and Poole Council can raise its share by up to 6.75%.