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How does a Council Determine My Council Tax Amount?

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Something like 25% of a council’s revenue is raised through council tax with government grants and income from other sources such as business rates making up the remainder.

The tax pays towards local services and also towards certain precepted authorities (such as the local parish council). In the past, council tax took the form of domestic rates and the amount payable was calculated on the basis of a property’s notional rental value at a specific date. Properties were divided into bands with certain bands paying a ratio of the total tax levied annually.

In the 1980s, the government introduced a replacement tax system based on the individual, the logic being that everyone in a community should pay an equal share of the cost of their public services. However, the tax was very unpopular with some elements of society and was eventually abandoned for council tax, which strongly resembles domestic rates in that it is based on council tax bands, divided based upon a notional capital value as at 1991.

In England, each dwelling is allocated to one of eight bands (Band A to Band H) with new properties being assigned a nominal 1991 value for this purpose.

Each local authority sets a tax rate based on its annual budget. That levy is expressed with reference to Band D properties on the assumption that they are inhabited by two liable adults (i.e. there is no deduction due for single occupancy).

The nominal Band D property total is calculated by adding together the number of properties in each band and multiplying by the band ratio. So 100 Band D properties will count as 100 nominal Band D properties, whereas 100 Band C properties will count as 89 nominal Band D properties.

Each local authority adds together the Band D amounts for their area (or subdivisions of their area in the case of civil parish council precepts) to reach a total Band D council tax bill.

To calculate the council tax for a particular property a ratio is then applied. For example, a Band D property will pay the full amount, whereas a Band H property will pay twice that amount. There is no upper limit for band H. This means that in reality, someone who lives in a multi-million home, will pay 3 times more than someone in a bedsit which falls into Band A.

The counter argument is that the local services consumed by the occupant of a mansion are likely to be no greater than the services consumed by the occupant of a bedsit.

Properties in England are put into one of eight bands (A-H), depending on the price they would have sold for in April 1991:

Council tax band Ranges of value
A Up to £40,000
B More than £40,000 and up to £52,000
C More than £52,000 and up to £68,000
D More than £68,000 and up to £88,000
E More than £88,000 and up to £120,000
F More than £120,000 and up to £160,000
G More than £160,000 and up to £320,000
H More than £320,000
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