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Council tax – the charge you pay your local authority for public services – is one of the most controversial levies in the UK. 

The tax hits some households far harder than others because of the way it is calculated. Properties are banded A to H, with the most valuable homes at the end of the scale facing annual bills worth thousands of pounds.

The system has been criticised as arbitrary and unfair because it’s based on property valuations that are 30 years old. It means that charges no longer reflect the huge surge in prices in areas such as London, and means residents in poorer parts of the country can end up paying higher bills.

For instance, the average council tax for Band D in Westminster is £969 in 2024-25 but in England’s smallest county of Rutland, Band D households will pay £2,543 – up 5pc on the previous year.

Those living in band H homes will pay double that at £5,087.

People in Nottingham, Dorset and Lewes, East Sussex, will also pay more than £2,500 in band D and more than £5,000 in band H.

Using outdated property valuations also means that many houses are in the wrong council tax band and could be overpaying by hundreds of pounds. 

So it is more important than ever to make sure you’re in the right band as council tax goes up.

Across the UK, average council tax bills will rise by 5pc in April 2024, £106 more a year than in 2023.

It used to be the case that councils could not increase bills by 2pc without consulting local residents. However, local authorities responsible for social care to increase council tax by 5pc without a local referendum.

More councils are also coming under intense financial pressure. When authorities declare effective bankruptcy, by issuing a Section 114 notice, they can be given permission by central government to raise by more than 5pc.

Residents of Birmingham, which issued a notice last year, will see their bills rise by 9.3pc in April. This is the highest increase in the country.

Here, Telegraph Money explains how council tax bands work and how to challenge yours if you think you’re in the wrong one. We’ll also reveal the discounts you can claim to knock hundreds off your yearly bills. In this guide we will cover:

• What is council tax?
• How are council tax bands worked out?
• What band are you in?
• Are you eligible for a council tax rebate?

What is council tax? 

Council tax was introduced in 1991, replacing the much-maligned poll tax – a flat fee paid by each individual, regardless of income. 

Council tax goes towards public services such as bin collection, street lighting, and also police and fire services. But an increasingly large portion goes to social care. According to the Local Government Association, almost 60p of every £1 paid in council tax is spent on social care for children and adults due to rising demand. 

As government support has dried up, council tax has become the main source of funding for local services. The Institute for Government, a think tank, estimates that local councils get half of their funding from council tax and the rest from government grants and retained business rates. 

A spokesman for the Local Government Association, which represents more than 350 councils across England and Wales, said: “In recent years, the Government has relied on council tax raising powers to increase councils’ core spending power. 

“While council tax is an important funding stream, it has never been the solution to the long-term pressures facing councils, particularly in high-demand services like adult social care, child protection and homelessness prevention.

 “Councils continue to face the tough choice about whether to increase council tax bills to bring in desperately-needed funding to provide services at a time when they are acutely aware of the significant burden that could place on some households.”

How are council tax bands worked out? 

In England, the property is placed into one of eight bands (A to H) depending on what their house would have been sold for on 1 April 1991.

If your house is a new build, then the Valuation Office Agency for England and Wales (VOA) will automatically assess it in order to place it in a council tax band. 

Properties in Scotland are also placed into eight bands labelled A-H. However, the valuations are different. 

Meanwhile, in Wales, there are nine bands (A-I) and these are based on property values on 1 April 2003. The valuations are also different: 

The Northern Ireland system works differently, based on a system of domestic rates. 

What band are you in?

You can find out the council tax band for a home in England and Wales by visiting the government website and typing in the relevant postcode. 

Choose the correct property details from the list provided and the site will show its local authority reference number, council tax band and what date it took effect. 

Your own band should also appear on any council tax bill sent to your address by the local authority. 

Are you eligible for a council tax rebate?

Challenge your council tax band

If there have been significant changes to the property or the surrounding areas since 1991 – for instance, if the building has been converted into a block of flats – then you may be able to challenge your council tax band and lower your bill.

If you think you’re in the wrong band, first ask neighbours in similar properties what band they’re in. You could find out you’re paying significantly more council tax than those living next door. 

To make a challenge, request a revaluation from the VOA. You can find a list of evidence that will support your challenge on the government website, but this will include property sale prices that show your house or similar houses have lower valuations. You can get these prices for free for property websites such as Zoopla and Rightmove. 

If you’re successful, then the council will refund you the money from when you first began paying tax for the wrong band. 

But be warned, your tax bill could rise if the VOA finds that you should be in a more costly band.

Get a discount

A surprisingly large number of people are eligible for a discount on their council tax bill.

If you live alone, then you can get 25 per cent off your bill – and 50 per cent off if others in the property can be “disregarded”. This includes apprentices, carers, student nurses, those with severe mental health difficulties (including dementia), and those with diplomatic privileges. You can also get a 50 per cent discount if your property is empty.

No council tax is owed if all the residents are full-time students or below the age of 18, care home residents, members of the armed forces in armed forces accommodation, prisoners or diplomats (provided they are not a British citizen and do not have a main residence in the UK).