I am today publishing a consultation paper entitled Technical Reforms of Council Tax. It follows, in part, from the Local Government Resource Review’s commitment to consider what flexibilities local authorities should have to help keep overall council tax levels down. It discusses a series of practical proposals which will help hard-working families and pensioners with their council tax bills.
Its proposals for discussion include:
Giving councils the flexibility to reduce or remove council tax relief on second homes and empty homes, allowing councils to use the money to keep overall council tax bills down and/or spend on improving frontline services. These flexibilities would potentially allow for a £20 reduction in the bill for a typical Band D property in England. Getting empty homes back into use will increase housing supply and tackle property blight. Councils can already reduce the second homes discount to just 10 per cent - we propose giving councils the local discretion to charge the normal rate of council tax. The job-related second homes discount (where someone has to live in a dwelling because of their job) would be unaffected. Indeed, our Government has increased the help the Armed Forces scheme gives for service personnel towards council tax. There is nothing morally wrong with second homes, but special tax relief at the expense of ordinary homeowners is difficult to justify. I believe local taxpayers would welcome the prospect of having a lower council tax bill than would otherwise be the case as a result of empty homes no longer being given favoured tax treatment.
The paper also consults on the empty homes premium for long-term properties announced by ministers in September. I would note that there are no plans to change the rules on council tax relief currently available in respect of properties left empty because a person has moved into a hospital or care home, has died, or has moved to provide care to another. These are special circumstances. 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.
Giving local residents a new right to pay their council tax bills in 12 monthly payments, rather than 10 instalments over a year. This will make it easier for local taxpayers to manage their payments, especially those on fixed incomes like pensioners.
Encouraging the greater use of electronic billing by allowing the associated documents that have to be supplied in hard copy with council tax bills to be provided electronically instead. Local taxpayers would still have a right to hard copy documents, for free, on request. Utility companies routinely offer discounts for customers who pay by e-billing and direct debit, and this is something I am keen to promote for council tax.
Ensuring there are no increases in the tax liabilities of homes as a result of domestic scale photovoltaic solar panels being installed by a third party supplier under a ‘rent a roof’ scheme. These changes will avoid the imposition of a ‘sun tax’ and the need for inspections of homes with solar panels.
Reviewing the circumstances in which giving a self-contained (‘granny’) annex its own council tax liability and banding is appropriate; this is a very complex area of legislation, but I appreciate that there has been some public concern that the current regime is unfair on some homeowners.
These practical improvements complement our other reforms to council tax: cancelling the council tax revaluation which would have forced up bills for millions of homes; working with local councils to deliver a two-year council tax freeze; and giving local residents a new right to veto excessive council tax increases. It contrasts with the last Administration who doubled council tax.