Your council is planning ahead for property tax – and so should you.
Written by Alan Murdie, LL. B, Barrister an expert in council tax law
Currently, most councils are busy drawing up bills and preparing to send them out for the annual property tax. If you are on a limited income, or expecting your income to go down, you need to plan ahead.
Indeed, whatever happens with Brexit negotiations, council tax will remain unaltered as an aspect of UK law totally unaffected by Britain’s relationship with the rest of Europe.
Between 1 February and 1 April your local council must meet to fix council tax levels for 2019- 2020. Whatever level it chooses locally, your council should already have arranged its Council Tax support and reduction levels for this year for those on low incomes (if they haven’t by 31 January, the Government imposes one).
Picking your instalment rate
As the law stands in England and Wales, if your bill is issued on or before 30 April in the relevant year, payments under the statutory scheme are made in 10 monthly instalments; and from 1 May onwards, the monthly instalments must equal one less than the number of whole months remaining for the financial year.
In England, if you act quickly, you have the legal right to request to pay your council tax bill in 12 monthly payments, rather than a maximum of 10 payments, in the course of the year. This means you can pay smaller instalments and spread the cost, rather than sticking to the council’s automatic 10-instalment scheme, which normally applies.
You can request to pay 12 monthly instalments ahead of the council sending the 2019 bill. Information on how to arrange this should be given with the explanatory notes that accompany your bill. Where you request to change your instalments to 12, you should tell the council in writing between 1 January and 15 April. If your request is made on or after 16 April, your number of monthly instalments is the number of whole months remaining in the relevant year after the issue of the bill.
Effectively, if you apply after 16 April, you are able to spread the remaining year’s liability over as many months as remains, which also means treating February and March 2020 as instalment months. You may have to argue for this, but the law is on your side. It may be necessary to remind your council that it has a discretion. Councils have certain statutory steps they have to follow, but also have broad discretion as to how they pursue debts, including accepting lump-sums. Ultimately, they can reach almost any reasonable sort of arrangement (using powers under the Local Government Act 1972).
Payment by Direct Debit – watch out!
Councils are very keen for you to sign a direct debit to pay council tax, but this not compulsory. I generally advise against it because it takes spending out of your control.
Direct debits for council tax are not a good idea if you expect your income to fluctuate or if there’s not likely to be enough – you could be hit with bank charges if you go into overdraft, which starts a cycle of bank and computer-generated debt. So I advise paying by instalments separately, also to avoid computer errors.
You should also be looking at any reduction or support scheme your council offers. I don’t put much faith in the reduction schemes myself (they quite right attract negative image because of their complexity) but at least go through the motions and put in a claim if you think it applies. You have the right to appeal reduction decisions to a Valuation Tribunal – though hardly anyone does in practice (often because councils won’t tell you about this, typically burying details within the text of its complex scheme).
What about if you owe sums from previous years?
If you owe sums for previous years, and paying for this year, remember you can allocate your money to which debt you want to pay first– this year or a previous year. Make it clear which year’s tax you want the money applied to. Otherwise the council will allocate any payments for you and potentially leave you in arrears.
You should pay the council directly anything you owe them (you can do this paying on-line or by sending in a cheque). The council should not turn away your money, being under a legal duty to collect the tax. Don’t accept any claim that you have to pay via the bailiff – who will want to add fees. Paying the council direct means bailiff charges can be avoided. Don’t accept the word of the first official you speak to over the telephone (on this point).
You can also apply for a discretionary reduction – another well-kept secret – to help with arrears.
Check the empty property exemptions
If your property is currently empty, or has been at any point in the last six years, check the exemptions to see if any apply (23 exist in all). One may apply to you.
Here’s my video explaining what exemptions are available for empty properties:
As for changing banding, your options are limited, and have been since 1994 (though this doesn’t remove the power of the Valuation Office to alter your banding, a decision you can challenge).
You could always move somewhere cheaper with a lower band (though most bandings are fixed until the next re-valuation).
Major opportunities for the taxpayer remain where the identity of the taxpayer has changed in the last six months, if a property has been extended and sold, a change from part-business usage (e.g. shop closure and conversion) or there has been a change in the neighbourhood affecting house prices. Or alternatively, move to Northern Ireland. There’s no council tax there.
Review the other videos in my series, including: