What is council tax?
The nutshell
Council tax is a yearly charge on homes in the UK. The money helps pay for local services, like collecting the bins, lighting the streets and caring for older people.
Every fact on this page comes from official government guidance and non-partisan explainers. Each source tag — like GOV — opens where a fact comes from.
The basics
What council tax is
Council tax is a yearly charge on homes. It helps pay for local services run by the council, such as collecting the bins, caring for older people and keeping libraries open. Council tax is one of the three main ways councils are funded, along with money from central government and business rates.IfG
How the bill is worked out
A council tax bill depends on two things — the home's valuation band and the rate the local council sets for that band.GOV In England, every home is put in one of eight bands, A to H. The band is based on the price the home would have sold for on 1 April 1991, not what it is worth today.VOA
Who sets it, and who pays less
Each council sets its own council tax rates every year.HoC A full bill assumes at least two adults live in a home. A home lived in by only one adult gets 25% off.GOV Other discounts and exemptions can lower a bill too.
- A home lived in by only one adult gets 25% off its council tax bill, according to GOV.UK.
- Each council sets its own council tax rates every year, the Institute for Government notes.
- Council tax is one of three main ways councils are funded, alongside government grants and business rates, the Institute for Government notes.
- Council tax bands in England are based on 1991 property values, not what a home is worth today, according to the Valuation Office Agency.
- Council tax is a charge on the home, not a fee for each person living in it, and a full bill assumes at least two adults, GOV.UK says.
- The local council sets the rate, but it does not set a home's band, which the Valuation Office Agency decides, per GOV.UK.
The deep end6 min
The band system, and the 1991 valuation
In England, the Valuation Office Agency places every home into one of eight bands, from A to H. A band is not based on a home's price today. It is based on what the home would have sold for on the open market on 1 April 1991.VOA A newer home is still given a band as if it had existed in 1991. Wales uses a later date, 1 April 2003, and Scotland runs its own system.
How a bill is set each year
The band decides the size of a home's share. The local council then sets the actual rate for each band.GOV Councils set these rates every year, and a range of discounts and exemptions can lower a bill.HoC A home with only one adult gets 25% off, according to GOV.UK. There are limits on how far a rate can rise. The Institute for Government notes a ceiling of about 5% each year for councils that run social care, above which a local vote is normally needed.IfG
Where council tax fits in council funding
Council tax is a tax on homes, and it is only part of the money a council has. The Institute for Government describes three main sources — government grants, council tax and business rates.IfG How much of a council's money comes from council tax has grown as central government grants have fallen, according to the Institute for Government. The topics on What Is a Council and the different kinds of council look at what that money pays for.