One is a £77.5 million eight-bedroom luxury mansion in one of London’s most exclusive postcodes. The other is a modest family home in County Durham on the market for £150,000.
Yet the owners of the three-bedroom semi-detached home in the village of Lanchester have to pay £1,794 in council tax every year.
Whereas the millionaires whose grand Belgravia property is worth 500 times more have to pay just £1,560.
Annual council tax £1,560: The £77.5 million eight-bedroom luxury mansion in one of London’s most exclusive postcodes
Annual council tax £1,794: The modest three-bedroom semi-detached home in the village of Lanchester, County Durham which is on the market for £150,000
Campaigners say this incongruity is just one example of why our council tax system is long overdue an overhaul. Next month marks 30 years since the birth of the 1991 property valuations that dictate how much council tax we pay.
The pandemic has also pushed more than one million of us into council tax arrears. But local authorities have been handed the power to push up bills by as much as 5 pc from next month. Backbench Tory MPs are also supporting calls to reform the tax, which they say is needed to ease the burden in poorer regions and help ‘level up’ Britain.
Money Mail today reveals:
- England’s richest areas have the lowest council tax burden. Homeowners in wealthy Westminster pay just 0.06 per cent of their property’s value.
- Meanwhile, poorer areas face a higher rate. Residents in the constituency of Easington in County Durham face bills worth 1.41 per cent of their home’s value.
- One London street has residents on one side paying £1,500 a year, while those on the other pay just £824.
- Around £3 billion is now owed in council tax arrears, Citizens Advice fears. The charity says more than half of these households weren’t in debt before the pandemic.
- The aggressive way in which councils chase the debt mean court and bailiff fees can turn a £167 debt into more than £2,000 in just two months.
Council tax replaced Margaret Thatcher’s unpopular poll tax in 1993. In England, homes were placed in bands from A to H depending on their estimated market valuation in April 1991.
A home worth £40,000 or less was put in band A, and homes worth more than £320,000 in band H. Rates in Scotland rely on valuations from 1991 too. In Wales, new bands were drawn up on valuations in April 2003. The money collected goes towards local services including road maintenance, leisure facilities, waste disposal and the police.
The latest figures from the Valuation Office Agency show 12,400 council tax bills were reduced last year after more than 42,000 appeals against band rates from homeowners.
We live in the very same street but pay twice the tax
by FIONA PARKER
Many residents of Hazelbourne Road in South-West London live in the same attractive Victorian terrace houses.
But one side of the street pays £1,502 a year in council tax for a band D property – and the other just £824.
This is because the side of the street with odd numbers sits in the Lambeth local authority area, and the other side is Wandsworth.
Michael Carter, left, lives on the Lambeth side of Hazelbourne Road paying more tax than Josh Beebee, right, who lives on the Wandsworth side with his cat Baloo
Michael Carter, 28, and his flatmates have to pay £1,850 a year in council tax between them for the flat they rent on the Lambeth side of the street.
He says: ‘It’s a bit like cutting the last carriage off a train. You’ve got to draw the line somewhere.
‘However, I do think it could be more of a steady gradient rather than such a steep difference in cost.’
Wandsworth resident Josh Beebee pays just £792 a year for his two-storey flat.
He says: ‘It is bizarre that there could be a £700 difference on the same street.’
But he would happily pay more for the service residents on the other side receive from Lambeth council.
Josh, 32, says he had to buy his own bins at around £40 each. And he says his side of the road often looks less well-kept.
Josh, who works in commercial property, says: ‘When I first moved here, I saw the saving as a real bonus.
‘But now, I’d much rather pay £300 or maybe £400 more to have the better service the other side of the street has.
‘Some days our side of the road is just filthy with litter and they don’t empty our bins properly.’
Another resident told Money Mail it was ‘wrong’ that he should have to pay so much more than his neighbours.
The pensioner, whose council tax is £2,170 a year, says: ‘It’s illogical that one side of the road should pay so much more than the other. I’m sure they could have divided the boundary in a more sensible way.
‘I don’t see why they had to split it down one road.’
Michael, from Melbourne, Australia, who has lived in the UK for six years, also believes property owners should pay the tax and not tenants. He says: ‘In Australia, it is the landlord who pays the tax — and I think that makes more sense because they own it.
‘It’s just another cost stopping renters like me from being able to buy a place of their own.’
Meanwhile, Finn Smart, who has been renting a flat since September, did not realise that residents on the other side of the road paid less council tax.
Finn, 22, did not know his council tax bill because it is included in his rent.
The finance worker says: ‘I just had no idea that the other side of the road paid less than us.
‘It’s just not something you would ever expect, for households on the same street to pay different rates.’
Unfair burden on worst-off
Critics say how much council tax you pay has very little bearing on how wealthy you are or how much your property is worth.
Campaign group Fairer Share, which is calling for council tax and stamp duty to be scrapped and replaced with a proportional property tax, says the poor have an unfair burden.
The group says homeowners in some of the most deprived areas in the country are paying more than some of the richest people in the world.
Those who live inside the boundaries of the wealthy Westminster local authority have their bills capped at £1,560 a year.
Fairer Share’s research reveals that the owners of a £3 million mansion in Wandsworth, South-West London, pay £1,647 a year in council tax.
Whereas residents in 75 homes in one street in Hartlepool, County Durham, which are collectively worth £3 million, have to shell out £106,795 every year.
Around £3 billion is now owed in council tax arrears, Citizens Advice fears. The charity says more than half of these households weren’t in debt before the pandemic
Fairer Share founder Andrew Dixon says: ‘The burden of council tax is getting worse and worse.
Council tax is a wealth tax for those in the poorer parts of the country. For the rich, it is a service charge to remove the bins. The worst thing about this tax is it is based on an arbitrary property value that is 30 years out of date.’
The campaign group wants to see properties taxed annually at 0.48 per cent of the value – with prices updated every year.
The campaign has the backing of backbench Tory MPs who want to see Chancellor Rishi Sunak announce a consultation on council tax reform.
John Stevenson, Tory MP for Carlisle, says: ‘There is huge disparity between areas. You often find lower value properties have higher rates. I think we are long overdue a reform.’
Aaron Bell, Conservative MP for Newcastle-under-Lyme, says a proportional property tax would be ‘more modern and much fairer’.
‘RatchetIng up’ regional rates
Research from lobby group the TaxPayers’ Alliance reveals that Mendip district council in Somerset increased its rates by 8.3 per cent last year – five times the rate of inflation.
Yet residents of Basildon in Essex, Corby in Northamptonshire and Chorley in Lancashire all had their bills frozen. Northumberland county council residents had the highest council tax bill in England at £1,848.39 a year for a band D property – compared to the lowest in Westminster at £449.92.
John O’Connell, chief executive of the TaxPayers’ Alliance, says: ‘Taxpayers are being battered by inflation-busting rate rises, with millions of pounds being collected over and above what would be normally expected.
Don’t pay more than you need
If you live alone, you are entitled to a 25 per cent single-person discount. You may also qualify if you share your home with someone considered exempt from council tax, such as children under 18 or older teenagers in full-time education.
Full-time college and university students, student nurses and people with severe mental impairment and receiving certain benefits are also not considered for council tax.
Some properties are exempt, such as those where all occupants are students.
Some local councils offer a reduction of up to 50 per cent on a homes that are empty and substantially unfurnished for six months.
This may also apply to empty properties that need major repairs to make them habitable.
This would apply for up to 12 months. Councils can give furnished second homes a discount of up to 50 per cent.
You can challenge the valuation of your council tax if you think you are paying too much.
Check the band of your neighbours living in similar properties, with regards to size and value, using the Valuation Office Agency (gov.uk/council-tax-bands), for England and Wales, or the Scottish Assessors Association (saa.gov.uk/).
If you find they are in lower bands than you, you may have a claim. However, it might mean they are all in the incorrect band and if you appeal everyone could end up paying more.
You can check the value of your property and your neighbours’ in 1991, when the bands were set. Use sites such as Rightmove and Zoopla, which show historical sales data. Compare this to the most recent sale.
If you are convinced you have a case, contact the Valuation Office Agency. In Scotland, enter your postcode on the SAA website, choose your property and click ‘make a proposal’.
While councils have been quick to reference social care pressures to explain rising bills, many authorities with no social care responsibilities are still ratcheting up rates.’
Council tax rises are implemented by individual local authorities but the Government sets the parameters. Currently, councils can usually raise bills by no more than 2 per cent every year unless a proposal for a higher increase gets the backing of residents in a referendum.
Yet the Government has allowed councils responsible for adult social care to hike bills to cover the rising cost.
It means the 152 authorities that provide care can increase council tax by an extra 3 per cent over the next two years.
The Local Government Association says strained councils were now facing a tough choice over hiking bills to protect services when any increases could be a ‘significant burden’ to some households hit hard by the virus crisis.
Would reform cost you more?
A proportional property tax would likely mean that many homeowners in London and the Home Counties would have more than £1,000 added to their annual bill.
Under Fairer Share’s proposals to scrap council tax and stamp duty and instead use a 0.48 per cent levy on the property value, those living in homes worth less than £500,000 would likely see their bills fall.
The group says tax increases would be capped so no household had to pay more than £1,200 on top of what they pay now.
It means a £4 million home in Beaconsfield, Buckinghamshire, currently paying £3,594 a year would pay £4,794.
A resident of a £1.25 million house in Boris Johnson’s Uxbridge and South Ruislip constituency in West London would face a rise from £3,206 to £4,406. And the owners of a £729,000 home in Aldershot, Hampshire, would pay £2,976 — a £1,200 increase on the current annual bill of £1,776.
Fairer Share also says asset-rich and income-poor residents could opt to defer payments until they sold their houses.
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