Council tax is paid by the occupiers of residential property to a local authority. It was introduced in 1993 to replace the community charge – or ‘poll tax’, which in turn replaced domestic rates – and has proven to be very unpopular. Domestic rates have not been replaced in Northern Ireland.
Council tax is organised according to ‘bands’, which determine how much a household pays. Local authorities set local rates and retain all of the revenue to support their budget, but valuation bands are set centrally based on property valuations that were made in 1991 in England and 2001 in Wales.
Assessment is designed to account for a number of attributes such as value, size, character and use, and layout. In theory, bills are therefore linked to the value of your property. However, while house prices have risen faster in some areas than others, council tax in England generally has more than doubled in the last 20 years. Consequently, council tax payments have grown relative to both property prices and indeed income in poorer areas.
Previous research has identified that areas with less expensive properties can proportionally face much higher bills. The following research compares average band D council tax for the year 2021-22 against house prices and median gross income in 363 local authority areas of Great Britain, demonstrating the ratio of council tax to average residential property prices and earnings.
CLICK TO READ THE FULL RESEARCH PAPER
Hyndburn now charges the highest average council tax relative to average house price in the country. Band D council tax is £2,011 per year, which represents 2.18 per cent of the average home price of £92,173.
Conversely, Westminster has an average house price of £1,000,560, but pays £829 per year in council tax on average, or 0.08 per cent.
93 local authorities charge over one per cent of the average house price in council tax, which includes every council tax area in the North East – but none in the South East.
Blackpool has the lowest gross median earnings in the UK at £19,808 per year, but charges £1,998 per year in council tax on average – ten per cent of the average salary.
Islington has the highest gross median earnings in the UK at £41,329 per year, but charges £1,640 in council tax on average. The London borough has the 15th cheapest council tax in England.
Five local authorities charged over ten per cent of the average yearly salary for their area in council tax. These were Nottingham, Teignbridge, Blackpool, North Devon and South Hams.
Seven of the top ten local authorities whose council tax was the highest relative to median gross salary increased their council tax in 2021-22 by more than the English average (4.45 per cent).