The Salary Calculator

How to Navigate the Council Tax Increase and Lower Your Bill

by Madaline Dunn

Council tax is one of the many household bills that are rising this month. Where you live and your property’s tax band will determine how much you pay. However, this year, few will escape the rise. 

As day-to-day life gets more expensive, Citizens Advice says one in three people are now “living on a financial knife edge,” with arrears on household bills up 25%.

Against this backdrop, this week at The Salary Calculator, we’ll walk you through: 

• How much will council tax increase?
• Why is council tax rising?
• Are you eligible for reductions or exemptions?
• Can you challenge your council tax band? 
• What happens if you don’t pay?
• Where can you find support for council tax debt?
• How to manage your money in the months ahead

How much will council tax increase?

Each year, councils are allowed to increase council tax by up to 4.99% without triggering a local referendum.

In 2025, 88% of authorities have decided to increase council tax by the maximum amount, and six have been granted permission to exceed this threshold by up to 10%: 

• Birmingham (7.49%), 
• Somerset (7.49%), 
• Trafford (7.49%), 
• Newham (8.99%), 
• Windsor and Maidenhead (8.99%)
• Bradford (9.99%).

A property’s council tax band determines the occupant’s tax bill, and in England, this is calculated based on how much the property would have sold for in 1991.

The more expensive a property is, the higher the council tax bill, with A being the lowest and H the highest. 

April is also bringing changes to how second properties are charged. From April, if a property is not a main residence, councils can charge a council tax premium of up to 100% unless it qualifies for exemption. 

Why is council tax rising?

According to a spokesperson for the Local Government Association (LGA), a body which represents councils in England, “severe funding shortages,” alongside “soaring cost and demand pressures on local services,” are the driving forces behind the hike. That said, the LGA noted that council tax increases alone won’t keep local services afloat. 

Indeed, in March, the County Councils Network (CCN), which represents England’s biggest councils, warned that without action in the next 12 months, rising SEND services costs could “trigger a wave of bankruptcies”. 

Already, a total of six councils have declared bankruptcy since 2021, including Birmingham City Council, which folded in 2023 following an equal pay dispute and a botched IT system. 

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“7 million people in the UK are behind on at least one household bill”

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Accusations of mismanagement have also been levelled against some councils, with “speculative” investments behind others’ cash flow issues.

In a statement to parliament in February, Secretary of State Angela Rayner said: “We recognise the importance of limited increases in helping to prevent these councils falling further into financial distress – but we have been clear this must be balanced with the interests of taxpayers.”

However, research shows that many taxpayers are already struggling to make ends meet. 

“We know that currently, household budgets are incredibly stretched – our latest research found that 7 million people in the UK are behind on at least one household bill, including council tax,” said Grace Brownfield, Head of Influencing and Communications at the Money Advice Trust, the charity that runs National Debtline, adding that there is “little sign of respite for many across the country.”

Are you eligible for reductions or exemptions?

That said, if you are on a low income or claiming certain benefits, you could be entitled to a Council Tax Reduction.

Eligibility depends on a number of factors, including individual circumstances and where a person lives, as each council has its own scheme.  

Some individuals are also eligible for council tax exemption. You can read more about the exemption process and who qualifies here. 

Likewise, if you’re the only person in your home over the age of 18, you’re entitled to a 25% council tax discount. 

Can you challenge your council tax band? 

With the last valuation in England taking place in 1991 (2003 in Wales and 2005 in Northern Ireland), many properties are believed to be in the wrong tax band. 

You can challenge your band if you believe this is the case or if changes have been made to your property, its use, or the local area. 

That said, it’s important to note that your band can either go up or down. 

There are a number of checks that you should carry out before challenging your band. This includes checking your neighbours’ band and your home’s value with a valuation calculator. 

According to the government’s Valuation Office Agency (VOA), between April 2023 and March 2024, 27% of those who challenged their council tax band were successful in securing a reduction. 

What happens if you don’t pay?

Missing a council tax payment means that you’re in arrears, and amidst rising costs, more and more people are finding themselves in this situation. 

In June 2024, figures from the Ministry of Housing, Communities, and Local Government revealed that outstanding council tax arrears reached £6 billion. That’s a 9% year-on-year rise and a 71% increase since before the pandemic, according to debt charity StepChange. 

If you miss a payment, the council will send a reminder, giving you seven days to pay, but if this bill isn’t paid within the seven-day window, you’ll no longer be able to pay council tax in instalments. 

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“If you are facing financial difficulty, the best time to seek support is now”

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Councils only send two reminders in a year, so if you’re late on a third payment, you’ll be sent a final notice requesting payment for the whole tax year.

After this, if you don’t pay, you’ll be sent a summons, incurring an additional fee, and this may require you to appear before the Magistrates Court. 

Failure to pay or explain why you’re not liable following this could result in the council applying for a Liability Order — this grants a council legal power to recover your debt. If granted, this will add an additional charge to your bill, and the council will be able to take a number of different actions to recover the debt. 

This can include deductions from wages and benefits, passing the debt to Enforcement Agents (bailiffs), making an application for bankruptcy or liquidation, and applying for a charge on your home.

In July, a BBC investigation found that bailiff referrals have risen by nearly 20%. The process has been the subject of much criticism over the years due to both poor practices on the part of bailiffs and the mental health impact on individuals. 

The most extreme action taken against council tax non-payment is an application to the court for a prison sentence of up to three months. 

England is now the only part of the UK that has retained the imprisonment sanction for unpaid council tax.

Where can you find support for council tax debt?

Indeed, as a priority debt, council tax comes above other household bills and carries significant risks if you fall behind on payments, meaning it’s important to address arrears head-on. 

“If you are facing financial difficulty, the best time to seek support is now. You can contact your local authority if you are struggling and ask them to agree to a payment plan,” explained Emily Whitford, Senior Public Policy Advocate at StepChange. 

“An independent, free and impartial debt advice charity like StepChange can also assess your income and expenditure and assess where savings can be made to pay towards debts. In some cases, a debt solution may be necessary to address your financial difficulty,” she added.

Brownfield echoed this, noting that while worrying about debts and wondering how to tackle them can feel “overwhelming,” it doesn’t need to be. 

“There is a wealth of support out there to help,” said Brownfield, adding that speaking to a free debt advice service, like National Debtline, is a “great first step.”

“You can call, webchat or get advice online. Talking to our experts can help you understand the best option for you and alleviate debt-related stress,” added Brownfield. 

Brownfield noted that services like National Debtline — or Business Debtline if you are self-employed — provide free, expert, impartial advice to help people deal with their debts. 

Head over to StepChange and Citizens Advice for more information about accessing support. 

How to manage your money in the months ahead

While council tax exemptions, reductions and refunds will go some of the way to help with rising costs, there are additional steps you can take to manage your money in the months ahead. 

Getting a clear picture of your finances is a good starting point. According to Brownfield, this begins with opening all of your statements. 

“It can be extremely tempting to ignore the envelopes or emails but resist the urge to leave them alone. Take a deep breath, open all of your statements and get a handle on how much you owe. Make a list of all your debts, including the outstanding balances and repayment dates,” she said. 

Brownfield also highlighted the importance of speaking to your creditors, noting that they will have a range of options to help you, depending on your situation. “While it can seem daunting, talking to your creditors or utility providers, if you’re struggling to pay your bills, is a really important step.”

“The National Debtline has template letters and emails you can use to get in touch with your creditors and explain your situation,” added Brownfield. 

Budgeting and expense tracking are also tools that can help you identify your spending habits and pinpoint any areas where you can cut back. 

“Working out how much you have coming in every month and what you need to spend on essential costs is often the single biggest step you can take,” said Brownfield, adding that the National Debtline’s My Money Steps tool can help guide you through this process.   

Finally, check whether you’re eligible for extra support. Last year, a report from social policy software and analytics company Policy in Practice (PIP) found that £23 billion of support is unclaimed each year, meaning you could be entitled to claim benefits. Brownfield noted that you can check what you are entitled to using the Turn2Us online benefits calculator.

Tags: council tax, council tax bands

Council tax spending: The breakdown

by Madaline Dunn

With news that council tax will be hiked by nearly 5% in some places across the country, it’s likely that you’ll be wanting to gain insight into what exactly your money goes toward and a breakdown of what is spent on what.

At The Salary Calculator, we’ve done the hard work for you, so you can understand more about your council tax bill. Below we’ll walk you through:

• The different council tax bands and how they’re calculated
• Where your money goes
• Which councils charge the most and the least
• How to check you’re in the right council tax band

Council tax bands

Council tax bands are calculated differently in England, Scotland, Wales and Northern Ireland, but in England, Scotland and Wales, there are between eight and nine Council Tax property value bands. In England and Scotland, A is the lowest and H is the highest, while Band D represents the midpoint of a “typical family home.” In Wales, however, properties are categorised into nine bands, from 1 (the highest) to 9 (the lowest).

Properties in England, for example, are categorised based on the price they would have sold for in April 1991. The same goes for Scotland, but in Wales, it’s slightly different, because the bands were revalued in 2003; as such, council tax bands are determined by the price a house would have sold for in April 2003.

Northern Ireland also has a different system; and while it doesn’t use council tax bands, it switched to a modified system of domestic rates, which is based on the capital value of individual properties. Under this system, to work out the ‘domestic rate poundage’ for your council area, the rateable capital value of your property is multiplied by the domestic regional rate and domestic district rate added together.

In England, the council tax bands are as follows:

• A up to £40,000
• B £40,001 to £52,000
• C £52,001 to £68,000
• D £68,001 to £88,000
• E £88,001 to £120,000
• F £120,001 to £160,000
• G £160,001 to £320,000
• H more than £320,000

In Wales, the council tax bands are:

• A up to £44,000
• B £44,001 to £65,000
• C £65,001 to £91,000
• D £91,001 to £123,000
• E £123,001 to £162,000
• F £162,001 to £223,000
• G £223,001 to £324,000
• H £324,001 to £424,000
• I more than £424,000

Where your council tax is spent

A few years ago, the Local Government Association analysed UK-wide data on council tax spending and projected that in 2019/2020, council tax would be spent on the following:

• 57p of each £1 would go to social care
• 8p would go to highways and public transport
• 8p would go to education support
• 8p of each pound would go to homelessness and planning
• 7p would go toward waste management and street cleaning
• 7p would also go to licensing, elections, trading standards
• 5p would go to museums, parks, libraries

Different councils will have different priorities when it comes to spending council tax, and a more updated, regional breakdown shows quite a bit of diversity. Below we’ve picked some councils from across the country to demonstrate this.

At Malvern District Council, for example, council tax is paid to five different organisations:

• For every pound you pay in Malvern, 70.4p is allocated to Worcestershire County Council, which goes toward adult social care, looking after children, road and path maintenance, libraries and waste disposal,
• 12.6p in each pound paid goes to the West Mercia Police and Crime Commissioner for crime and safeguarding,
• 8.7p stays with the district council to fund services such as waste and recycling collections, housing, parks, public toilets, and elections.
• 4.5p goes to Hereford & Worcester Fire and Rescue Service for fires and major emergencies,
• 3.8p in every pound goes to the town or parish council, for parks and playgrounds, cemeteries, bus shelters, etc.

Similarly, through Ealing Council, children’s and adults’ social care services are where most of the money is distributed, making up 60p in each pound of the council’s spending.

Elsewhere, Bath & North East Somerset Council’s spends:

• Adult Social Services: 48.9p,
• Children’s Services: 27.4p,
• Refuse Collection & Disposal: 12.1p,
• Highways, Transport, Planning & Economic Development: 8.8p,
• Housing & Public Protection: 5.6p.

In Uttlesford District Council, meanwhile, money is distributed as follows:

• 71p goes to Essex County Council,
• 11p goes to the Police, Fire & Crime Commissioner – Policing and community safety,
• 9p goes to Uttlesford District Council,
• 5p goes (on average) to town and parish councils,
• 4p goes to the Police, Fire & Crime Commissioner – Fire & Rescue Authority.

Dartford Borough Council spends council tax on the following:

• 74p to Kent County Council, for education, social services, adult social care, etc.,
• 9p to Dartford Borough Council, to pay for community and housing, refuse collection and recycling, environmental services, etc.,
• 11p to The Police and Crime Commissioner for Kent for crime and protection services,
• 4p to Kent and Medway Fire and Rescue Authority for fire and other emergency services,
• 2p to Town and Parish Councils (on average) for maintaining: allotments, common lands, burial grounds, play areas, etc.

Interestingly, in North Herts, the majority of your pound goes to waste collection and street cleaning. The spending figures are as follows:

• Waste collection and street cleaning – 41p,
• Parks and green spaces – 23p,
• Environmental health – 11p,
• North Herts Museum and Hitchin Town Hall – 9p,
• Housing advice and homelessness support – 9p,
• Community safety and environmental crime – 4p,
• Grants to community organisations, including area committee grants – 3p.

Council tax bills and spending comparison

As explained above, council tax bills and spending vary depending on where you’re situated within the UK, however, according to government council tax figures, the average council tax of a Band D property set by local authorities across England is £1,966. In London, however, the average Band D property is £1,684 a year.

Below we compare what some of the different councils in the UK are charging.

According to the latest figures, Pembroke council has the lowest council tax, ‘Band D’, in Wales for 2022-23 at £1,249.17. Meanwhile, the most expensive council tax band is Rutland County Council in the East Midlands, at £2,300 a year. Westminster, comparatively, has the lowest bills in England, with Band D homes set to pay around £920 a year with the latest hike, which is still less than half the average in England.

Check you’re in the right council tax band

Due to the way that homes were valued back in 1991, experts believe thousands are in the wrong band. So, it’s definitely worth checking.

You can do this by first checking with your neighbours’ council tax bands. And don’t worry, there’ll be no awkwardness because you don’t have to check with them directly; by using either, Gov.uk (in England) and Scottish Assessors’ Association (SAA)(in Scotland), you can find all the information you need. If your neighbours are in different bands, this could mean that you have a cause – but beware, it could go either way – neighbours’ bands could increase in line with your own. That’s why it’s important to do a valuation check – check out this free house price valuations guide, to find the tool that works best for you.

Once you’ve gathered the above information, passed the point of speculation, and done sufficient research, you can reach out directly to the Valuation Office Agency (VOA), or the Scottish Assessors’ Association (SAA) in Scotland. It’s worth bearing in mind that a formal challenge can only be launched if you’ve resided in the property for six months or less. Likewise, if your request is rejected, you have three months to appeal to the Valuation Tribunal.

Tags: council tax, council tax bands, Economy, taxes