Why It Matters Council Tax
Summary
We have provided you with the cost each band is set at for every postcode in London, so you will know what the baseline council tax would be for a residential dwelling in any given neighbourhood, before any discounts or adjustments you may be eligible for, are applied.
Definition
Council tax is a cost levied on tenants and owners of domestic property by their local council to contribute to services that it provides. London (and England and Scotland as a whole) has eight Council Tax bands ranging from A (the cheapest) to H. The band that a home falls within is based on the price the property would have sold for on the open market on 1 April 1991.
The more expensive the property, the higher the Council Tax band. All properties are banded on the same basis, including properties bought under discount schemes, such as Right to Buy. The purchase price discounts applied to these properties are not taken into account when setting the band.
Interpretation
In addition to showing you the £ amount of council tax you would need to pay in each of the aforementioned bands, we have additionally shown the London-wide average so that you can compare your local banding to the London-wide average.
Why the metric matters from a commercial inhabitant’s perspective
Business rates, as opposed to council tax, are the equivalent cost levied on commercial property owners and tenants, therefore council tax is unlikely to impact commercial inhabitants.
Why the metric matters from a residential inhabitant’s perspective
Residents will be keen to compare how much council tax they would pay for comparable properties across different neighbourhoods because whilst council tax amounts to a large extra running cost for most households, it could be that the larger home you were considering moving to which costs more to buy or rent initially, will actually cost less to run when the council tax for that postcode is factored in.
Because of the variation in council tax across London, even when comparing ostensibly identical properties, residents and potential residents will be keen to compare this cost to the level of service their local council provides, so that they can assess their return on this large living cost. This makes the level of council tax one of the key considerations in deciding which neighbourhood returns the best amenity value for residents.
Commentary
Council tax is the dominant source of locally-raised income for most local authorities. Council tax is comprised of several elements. In addition to the charges levied for the local authority responsible for the area, it may include charges collected for some or all of the following categories of authority: county council (the Greater London Authority in London), fire and rescue authority, the police and crime commissioner, combined authority, and the parish or other local precepting council. There are a number of special factors which may have affected the decisions of local authorities when setting their council tax levels.
Surprisingly Buckingham Palace is only required to pay under £1,500 in council tax! (Photograph: Tristan Surtel, Wikimedia Commons)
Trivia
Although the Queen is not legally obliged to pay tax she pays income tax, capital gains and council tax voluntarily. Buckingham Palace falls into the Valuation Band H, which means the Queen is currently eligible to pay £1,421.00 per year in council tax..
History
Since the Tudor period, domestic property rates, which were based upon a multiple of the realisable annual private sector rent, aka the “rateable value(s)”, were levied on owners and tenants of domestic property. These were intended as a way of raising funds for the poor, before the concept of the welfare state, as it exists today, was conceived of. By the 17th century these charges were being used to fund local government services instead.
In 1990 this aspect of domestic property taxation was replaced, by Margaret Thatcher’s Conservative government, with the controversial Community Charge or “poll tax” as it was commonly referred to. While rates had been based on the value of property, the poll tax was a per head tax that saw every adult pay a fixed rate amount set by their local authority. The fact that the tax was levied on the person not the property made it very difficult to administer and enforce, and local authorities with more mobile populations, such as those with seasonal workers suffered more from non-payment and therefore had funding shortages. The fact that local authorities were burdened with chasing debtors meant that they struggled to enforce in cases of non-payment and therefore non-payment was as high as 30% in some areas.
The introduction of the new system, which placed a greater burden on poorer people than the wealthy due to its fixed rate, led to some civil unrest across Britain, known as the poll tax riots, in the year the new levy came into force. It was such an unpopular measure that surveys at the time showed that 78% of the public were against it. Its lack of popularity, was thought to have been one of the primary reasons that Margaret Thatcher was ousted by her own party.
Council Tax, the replacement method of property taxation by local authorities to fund local authorities, was introduced in 1993, by Margaret Thatcher’s successor John Major. Council Tax is primarily a property tax, but also has personal elements in it and can thus be seen as a hybrid tax.