New common sense measures will save ordinary families up to £20 a year in council tax, and make bills easier to pay, Local Government Secretary Eric Pickles announced today. This comes on top of the council tax freeze over the last two years which has cut council tax in real terms.
Following a consultation, the Coalition Government is today confirming plans to amend council tax rules so elected local councils have greater local flexibility to help residents through fairer approaches to tax billing, second homes, empty homes and solar panels. Further steps will also be taken to support family annexes to help elderly relatives and extended families.
These reforms could allow councils to make up to a £20 reduction in the bill for a typical Band D property in England, or hold bills down by the same amount.
The Government will amend council tax laws to:
- Make bills easier to pay by giving local residents a new legal right to choose to pay their council tax bills in 12 monthly payments, rather than the fixed 10 in the course of a year. This will help those on fixed incomes, like pensioners.
- Promote the take-up of voluntary electronic billing, by removing regulatory obstacles. The Government is keen to promote e-billing and direct debits, delivering savings for councils which could be passed onto local taxpayers. Residents will retain the right to hard copy documents, if they wish.
- Give councils greater local flexibility to choose to waive special tax relief on second homes and empty homes, allowing councils to use the monies to keep the overall rate of council tax down. This would allow a £20 saving on a Band D council tax bill for ordinary families. There will be no requirement for councils to make any changes, if they do not wish.
- There will be no changes to homes which are empty due to the death of the owner or if the resident is away in care or hospital. Nor will there be any changes to the ‘job-related’ second homes discount. The Government has already provided 100 per cent council tax relief to Armed Forces personnel on operational duties abroad for six months.
- Reforms will also allow councils to tackle long-term empty homes (empty for more than two years), through an empty homes premium. This is since empty homes can attract squatters and vandalism, blighting communities and harming local amenity of nearby resident families.
- Prevent a ‘sun tax’ supplement on bills for homes with solar panels or the need for intrusive inspections where panels are installed by a third party under the rent a roof scheme. Domestic scale solar panels will continue to be treated as part of the home.
Mr Pickles also announced that his department is to undertake further work into supporting family annexes. Ministers are keen to remove tax and other regulatory obstacles to families having a live-in annex for immediate relatives - such as teenagers or their elderly grandparents. Such reforms will help increase housing supply and help ensure the elderly have dignity and security in retirement.
Eric Pickles, Secretary of State for Communities and Local Government, said:
Since 1997 council tax bills have more than doubled. The Coalition Government’s council tax freeze has cut council tax in real terms over the last two years.
These further common sense reforms will help families and pensioners with their cost of living, keeping bills down and making bills easier to pay.
This Government is on the side of ordinary families, who work hard and do the right thing.
These practical improvements build on other recent Government local tax policies including:
Confirmation that there will be no council tax revaluation which would have forced up bills for millions of homes;
The revocation of laws which would have imposed bin taxes on family homes;
Two years of real terms council tax cut delivered by the Government’s freeze grant deal. The average Band D change across England this year as a mere 0.3 per cent. Last year there was no change;
New rights for residents to veto excessive council tax increases - this year set at 3.5 per cent. No council tried to increase council tax above this level.
Notes to editors
The consultation on technical reforms of Council Tax was launched on 31 October 2011 and closed on 29 December 2011. The summary of the 398 responses can be found here: www.communities.gov.uk/publications/localgovernment/technicalreformcounciltaxsors.
Councils can already reduce the discount on second homes from 50 per cent to 10 per cent. The reforms will increase the flexibility to remove the discount completely, so they pay the same as an ordinary home. There will be no changes to the job-related second homes discount.
The Government is also to give councils the discretion to reduce or remove the existing 100 per cent tax relief on ‘Class A’ and ‘Class C’ empty homes ahead of proposals to abolish both classes in the future. There are no plans to change the rules on council tax relief currently available for homes left empty because a person has moved into a hospital or care home, or has died, or has moved to provide care to another. These are special circumstances where there is a justification for a home temporarily lying empty. Moreover, councils will be encouraged to use their existing powers to apply discretionary discounts in cases where homes are empty due to other justifiable circumstances - for example, hardship, fire or flooding.
The Government has undertaken to carry out further work to consider the issue of domestic annexes or so called ‘granny flats’ and on liability of banks/mortgagees in cases of repossession with a view to developing proposals in due course. Currently, council tax inspectors treat such annexes as a separate property, meaning families get charged twice for the same single property they occupy. Lenders are currently exempt fro council tax in case of repossession.
Council tax was £688 in 1997-98. This means council tax has risen over one hundred per cent - or an extra £751 a year on a Band D home in the years up to 2010-11 before the freeze grant was offered. Since all other Bands are set as a percentage of Band D, homes in every band have seen their bills double. Average Band D council tax and percentage change between 1993-94 and 2012-13 are shown below: