Our Guide to Why Do We Pay Council Tax

Len Burgess[1]

Len Burgess

Money Savings Advice guide to why we pay council tax

It’s easy to feel a little bitter about paying council tax. Not only is this a bill that you’re forced to pay just for having a home, it’s also a priority payment with severe consequences if you can’t afford your council tax bill.

Why Do We Pay Council Tax?

Council Tax is a tax on all homes in the UK. Councils use it to pay for services including schools, refuse collection, and maintaining roads. You have to pay it whether you rent or own a home. Discounts are available for people who live on their own.

As you’re being charged by your local council, they can take the money straight from your wage if you start to fall behind with payments. If you really can’t keep up, you may have bailiffs at your door or could face the prospect of prison. So, what does your council tax cover?

Read on for more information about why we pay council tax.

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Does Everyone Pay Council Tax?

A relatively small number of people are exempt from paying council tax.

You’ll need to pay if you’re 18 or over, but may be exempt if you’re a current student in full-time education. If there is one non-student living with students, they’ll need to pay council tax but with a 25% reduction.

You may also get reduced council tax rates if you’re disabled or living in UK armed forces accommodation.

How Much Money Does Council Tax Raise?

Council tax is a vitally important tax, as without it, councils could not support the essential services in your area.

This table demonstrates how much council tax was collected in each of the last 5 tax years, versus how much was outstanding.

Tax Year Council Tax Paid Council Tax Outstanding % of unpaid Council Tax
2018-19 £29,826,000,000 £3,236,000,000 9.8%
2017-18 £28,006,000,000 £3,023,000,000 9.7%
2016-17 £26,613,000,000 £2,836,000,000 9.6%
2015-16 £25,318,000,000 £2,734,000,000 9.7%
2014-15 £24,558,000,000 £2,657,000,000 9.8%

Source: Government Council Tax Statistics

While the amount of council tax is well into the billions, there are many billions missing each year due to arrears. Almost 10% of council tax goes unpaid – consider how much better council services could be with that extra funding.

What Does Council Tax Cover?

Council tax helps to pay for a range of different public services. The funds are used for rubbish collections, schools and street lighting. Council tax funds will also pay towards the maintenance of roads, green spaces and public parks.

Your council tax may be used to fund other public services like libraries and public museums. It may help towards the costs of play areas, local transport subsidies, public cleaning, social care, recycling and flood defences.

The council tax you pay must be spread across many different public services.

Does Everyone Pay the Same Council Tax?

Your council tax rate will be determined by the council according to your property’s band. Your property is put into a band according to its estimated value, and you're likely to be paying the same amount each year as others in similar homes. The more valuable your home, the more you’ll pay for council tax.

Houses were put into council tax bands way back in 1991. In some cases, these bands have never been re-evaluated. You could be paying council tax based on the value of your home roughly 30 years ago.

You have a right to ask for your home’s value to be reassessed. Bear in mind that this could work in your favour, but might mean you end up paying even more. Alerting the council to an area where they’re not making as much as they could may also have an impact on your neighbours.

Do We Have to Pay Council Tax?

Unless you’re exempt, your council tax payments are essential. You can’t get away with not paying, and there are severe penalties for falling behind on your payments. Council tax arrears are not to be ignored, and council tax debt is one of the worst types to be in.

Many people struggle to pay their council tax bill. In fact, council tax debt totals around £3 billion in the UK. What’s more, as a totally unavoidable bill, council tax is one of the only expenses that you can’t cut by looking elsewhere. You can’t cancel the service and stop paying, nor look for a more fairly-priced competitor.

Many people feel angry about paying council tax, and if you do then you’re not alone. It’s especially hard to keep paying council tax when public services are cut all the time. Your local library might have closed, there are more potholes in roads to damage your car and your child’s school is stretched and can’t cope.

Local authorities are funded by council tax as well as money from the central government. As money from the central government reduces, the councils are forced to make budget cuts or raise your council tax bill. As a result, you might notice that you’re paying as much as you’ve always done – and possibly even more – whilst watching local services gradually run out of money.

Councils are forced to increase their council tax rates, charging more for the same services. This is because they’re not getting as much money from the central government as they have been in the past.

Struggling to Pay Council Tax?

Most people wonder ‘Why do we pay council tax?’ when they're struggling to pay. They’re trying to cut costs wherever they can, and council tax stands in their way. You might wonder if there’s any way to delay or cancel your payments.

Unfortunately, council tax is one of life’s essentials. You can’t get away with skipping payments, and there are many ways for councils to take their share if you won’t hand it over willingly. Council tax is one outgoing that you’ll just have to keep in your budget.

Council tax is a priority debt. If you start to struggle financially, do your best to keep paying your council tax monthly. If you start to miss payments, you’ll become responsible for paying the year’s rate all at once. If you can’t pay the full year’s rate in one go, the council will move on to other methods of debt collection.

Your council tax payments should be prioritised above loans, credit cards, store cards and many other debts.

If you’re falling behind, speak to someone about your financial situation. Create a detailed budget and present it to your local council. If the council can see that you’re stretched to your limits, they may offer a fair payment plan. It’s important to address this as soon as possible, not bury your head in the sand.

Managing Your Household Budget

Household budgets are often stretched, and you’ll need to put your bills in priority order then see where you can save money.

If you’re struggling to pay for everything you need, look for areas where you can cut costs. You may be able to reduce the frequency of some things you pay for, drop to lower level memberships or cancel subscriptions completely. Try all these things before you tell the council that you can’t keep up with council tax payments.

If you’re forced to choose between paying council tax and making a minimum payment on your credit card, then your council tax should always come first as a priority debt. Remember that your credit card provider can’t take the money directly from your wage before you get it, nor suddenly ask for a full year’s debt to be cleared in a matter of weeks.

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Money Savings Advice Author Len Burgess

Len Burgess

Len Burgess is a professional financial writer who over the last five years has written hundreds of articles for all financial sectors. Len founded Money Savings Advice with the aim of helping consumers navigate their way around the financial world by providing easy to understand financial information and matching consumers with the best financial advisor based on their personal information.

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