How your council tax is calculated: everything you need to know

If you’re wondering how your council tax is calculated, you’re not alone. Council tax is often one of those bills that we pay by direct debit each month and then not pay it much more attention. But amid the cost of living crisis, such as higher energy costs, it pays to take a closer look at your bills.

Council tax helps fund a long list of local services like bin collections, police and fire services, support for the elderly, street cleaning and looking after parks and cemeteries.

Over £32billion was collected in council tax last year by local authorities across England, and with bills rising again, we explain everything you need to know.

How is council tax calculated?

How much you pay in council tax depends on two things: your property’s council tax banding, and how much money your local authority needs for public services.

The rule is that the higher the value of your property, the more you pay in council tax. In England and Scotland, Band A is the lowest band rating and incurs the lowest rate of council tax, while at the other end of the scale, Band H means residents pay the highest council tax bills.

Council tax bills are based on Band D, which, according to the Ministry of Housing, Communities and Local Government, is used as the standard measure of council tax (opens in new tab). 

Households in Band D pay an average of £1,898 a year, and for households in bands either side of this, council tax bills are then either reduced on a sliding scale down to Band A, or increased upwards on a sliding scale up to Band H.     

Across England, this means properties in Band A pay a third of the council tax charge compared with properties in Band H.

Most households will now have received their council tax bills for the 2022-23 year,  and payments can be made in ten monthly instalments, with a payment break in February and March the following year.  You can arrange to pay in twelve monthly payments, (at no extra cost), if you contact your local council.

How much is my council tax?

If you don’t have your bill to hand, and you need to check which council tax band you’re on, there are other ways to check.  

You can do this using the postcode checker (opens in new tab) on the Government website for properties in England and Wales and on the Scottish Assessors (opens in new tab) website for properties in Scotland. In Northern Ireland, there’s a system of rates, rather than council tax. 

You can also find the annual council tax charged by any local authority using the Which? postcode checker (opens in new tab).   

Council tax bills for properties in the same band will vary across different authorities, depending on the area and services provided. For example, a Band A property in Boston, Lincolnshire means a council tax bill of £1,325, compared with £1,406 in Cornwall.  

At the other end of the scale, a Band H property in Boston means an annual bill of £3,975 compared with £4,218 in Cornwall.

Can the council raise council tax?

Local authorities can put up council tax bills each year, however they can’t charge what they like, without further consultation.

During the Autumn Budget, the Chancellor gave the green light for councils to increase council tax bills by up to 3% for the 2022/2023 year.  

If they want to charge more, this needs to be agreed by a local referendum, according to the Local Government Association.

How can I reduce the amount of council tax I’m paying?

You may be able to get a reduction on your council tax bill (opens in new tab) in certain circumstances, for example if you live alone, you can qualify for a 25% discount.  

And if you’re selling a property after someone’s who died, there’s no council tax liability until after Probate, providing the property remains empty.

Households in England and Scotland will also get a £150 non-repayable council tax rebate this April as part of a financial support package to ease the burden of rising costs.