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Mortgage Glossary: Council Tax

Council Tax

The Council Tax is a local tax collected by councils in England, Scotland and Wales and based on property value. Each property in England and Scotland is allocated to one of eight bands, from A to H. In Wales a ninth band of I has been added to cover the most expensive homes. The banding in England and Scotland is based on a property's market valuation as of 1 April 1991, two years before the Council Tax was introduced as a replacement for the Community Charge, or poll tax as it was often called.

Council Tax bands in Wales were revalued in 2005 and are based on property values as of 1 April 2003. This revaluation led to around a third of properties in Wales moving up a band, due to the increase in house prices in the late 1990s and 2000s. Less than one in ten properties moved down a band.

The lowest band A covers properties of up to £40,000 in England, up to £44,000 in Wales and up to £27,000 in Scotland. Band H covers properties worth more than £320,000 in England and £212,000 and above in Scotland. In Wales the top Band I covers properties worth more than £424,000.

Homeowners and tenants can ask to have the banding of their home reassessed at any time. This process is handled by the Valuation Office Agency. Be warned though reassessment can lead to your home being put in a higher band.

Homeowners and tenants can also apply for a Council Tax discount. If only one adult lives in the property the Council Tax discount will be 25%. If the property has been adapted to meet the needs of a disabled occupant it can be put in a lower band.

Council Tax discounts of between 10% and 50% are available for furnished second homes or holiday homes. Homes that have been empty or unfurnished for more than six months may be entitled to a discount of up to 50%. No council tax applies to a property occupied entirely by full time students.

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