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Encyclopedia > Council Tax
Public finance
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Council Tax is the system of local taxation used in England[1], Scotland[2] and Wales[3] to part fund the services provided by local government in each country. It was introduced in 1993 by the Local Government Finance Act 1992, as a successor to the unpopular Community Charge. The basis for the tax is residential property value, with discounts for single and vulnerable people. As of 2006, the average annual levy on a property in England was £1,056.[4] Not to be confused with Political economy. ... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        Monetary policy is the process by which the government, central bank... In macroeconomics, money supply (monetary aggregates, money stock) is the quantity of currency and money in bank accounts in the hands of the non-bank public available within the economy to purchase goods, services, and securities. ... For other uses, see Gold standard (disambiguation). ... Fiscal policy is the economic term that defines the set of principles and decisions of a government in setting the level of public expenditure and how that expenditure is funded. ... Government spending or government expenditure consists of government purchases, which can be financed by seigniorage (the creation of money for government funding, at a heavy price of high inflation and other possibly devastating consequences), taxes, or government borrowing. ... A budget deficit occurs when an entity (often a government) spends more money than it takes in. ... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        Government debt (also known as public debt or national debt) is... This article does not cite any references or sources. ... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        For other uses of this word, see tariff (disambiguation). ... A trade pact is a wide ranging tax, tariff and trade pact that usually also includes investment guarantees. ... Finance studies and addresses the ways in which individuals, businesses, and organizations raise, allocate, and use monetary resources over time, taking into account the risks entailed in their projects. ... This article does not cite any references or sources. ... There are two basic financial market participant catagories, Investor vs. ... Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ... Personal finance is the application of the principles of finance to the monetary decisions of an individual or family unit. ... This article does not cite any references or sources. ... For other uses, see Bank (disambiguation). ... Fractional-reserve banking refers to a financial system in which some fraction of the deposits can be used to finance profitable but illiquid investments. ... Full-reserve banking is a theoretically conceivable banking practice in which all deposits, banknotes, and notes in a financial system would be backed up by assets with a store of value. ... Please wikify (format) this article or section as suggested in the Guide to layout and the Manual of Style. ... Islamic banking refers to a system of banking or banking activity that is consistent with Islamic law (Sharia) principles and guided by Islamic economics. ... A tax is an involuntary fee paid by individuals or businesses to a state, or to functional equivalents of a state, including tribes, secessionist movements or revolutionary movements. ... For other uses, see England (disambiguation). ... This article is about the country. ... This article is about the country. ... The Local Government Finance Act 1992 includes obligations of the occupants or (in the case of Houses in Multiple Occupancy) the owners of properties in the United Kingdom to pay council tax. ... A poll tax, head tax, or capitation is a tax of a uniform, fixed amount per individual (as opposed to a percentage of income). ... 2006 is a common year starting on Sunday of the Gregorian calendar. ...

Contents

Organisation

Council Tax is collected by the local authority (known as the collecting authority). However, it may consists of components (precepts) levied and redistributed to other agencies or authorities (each known as a precepting authority).


Collecting authorities

The collecting authorities are the councils of the districts of England, principal areas of Wales and council areas of Scotland, i.e. the lowest tier of local government aside from parishes and communities. The districts of England are a level of subnational division of England used for the purposes of local government. ... For local government purposes, Scotland is divided into 32 areas designated as Council Areas of Scotland which are all governed by unitary authorities designated as Councils which have the option under the Local Government (Gaelic Names) (Scotland) Act 1997 (as chosen by Na h-Eileanan an Iar) of being known...


Precepting authorities

The precepting authorities are councils from other levels of local government such as a county or parish councils and other agencies. In metropolitan counties where there is no county council, the joint boards are precepting authorities. There may be precepting authorities for special purposes which cover an area as small as a few streets or as large as an entire country.

Strategic authorities Greater London Authority, county councils
Joint boards Passenger Transport Executives, police authorities, fire authorities
Public-owned utilities Scottish Water
Lowest tier authorities civil parishes
Special purpose authorities National Park Authority, Olympic Delivery Authority

These all set their precepts independently. Each of the levying authorities sets a precept (total amount) to be collected for households in their area. This is then divided by the number of nominal Band D properties in the authority's area (county, district, national park, etc.) to reach the Band D amount. The Greater London Authority (GLA) administers the 1579 km² (610 sq. ... In the British Isles, a county council is a council that governs a county. ... In the United Kingdom, Passenger Transport Executives (PTEs) are local government bodies which are responsible for public transport within large urban areas. ... Police authority - Wikipedia /**/ @import /skins/monobook/IE50Fixes. ... In the United Kingdom a Fire Authority or Fire and Rescue Authority is a body or committee which oversees the operation, policy and service delivery of a county or metropolitan fire and rescue service. ... Scottish Water is a state-owned company in Scotland that provides water and sewer facilities. ... A civil parish (usually just parish) in England is a subnational entity forming the lowest unit of local government, lower than districts or counties. ... A National Park Authority is a special term used in the United Kingdom for the legal body in charge of a National park. ... The Olympic Delivery Authority (ODA) is the body responsible for ensuring delivery of venues, infrastructure and legacy for the 2012 Summer Olympic and Paralympic Games in London. ...


Calculation

Each dwelling is allocated to one of eight bands coded by letters A to H (A to I in Wales) on the basis of its assumed capital value (as of 1 April 1991 in England and Scotland, 1 April 2003 in Wales). Newly constructed properties are also assigned a nominal 1991 (2003 for Wales) value. Each local authority sets a tax rate expressed as the annual levy on a Band D property inhabited by two liable adults. This decision automatically sets the amounts levied on all types of households and dwellings. 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 only count as 89 nominal Band D properties.) Each collecting authority then adds together the Band D amounts for their area (or subdivisions of their area in the case, for example, 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. A Band D property will pay the full amount, whereas a Band H property will pay twice that. is the 91st day of the year (92nd in leap years) in the Gregorian calendar. ... Year 1991 (MCMXCI) was a common year starting on Tuesday (link will display the 1991 Gregorian calendar). ... is the 91st day of the year (92nd in leap years) in the Gregorian calendar. ... Year 2003 (MMIII) was a common year starting on Wednesday of the Gregorian calendar. ...


Revaluation

The government had planned to revalue all properties in England in 2007 (the first revaluations since 1993) but, in September 2005, it was announced that the revaluation in England would be postponed until "after the next election".[5] At the same time, the terms of reference of the Lyons Inquiry were extended and the report date pushed out to December 2006 (subsequently extended to 2007).[6] In Wales, tax bills based on the property revaluations done using 2003 prices were issued in 2005. Because of the surge in house prices over the late 1990s and early 2000s, more than a third of properties in Wales found themselves in a band higher than under the 1991 valuation. Some properties were moved up three or even four bands with consequent large increases in the amount of council tax demanded. Some properties were moved into new Band I at the top of the price range. Only 8% of properties were moved down in bands. For the band, see 1990s (band). ... This article is about the decade of 2000-2009. ...


However, a large shift of properties between bands will cause a shift in the allocation of the charge between bands, and the tax levied for each particular band will then drop, as the total amount collected will remain the same for each authority (see 'calculation of amount' above). Between the wholesale revaluations, a major change to a property (such as an extension, or some major blight causing loss of value) can trigger a revaluation to a new estimate of the value the property would have reached if sold in 1991. If such a change would result in an increase in value, then re-banding will only take effect when the property is sold or otherwise transferred.


Current bands

In England, the council tax bands are as follows : For other uses, see England (disambiguation). ...

Band Value[7] Ratio[8] Ratio as % Average[9]
A up to £40,000 6/9 67% £845
B £40,001 to £52,000 7/9 78% £986
C £52,001 to £68,000 8/9 89% £1,127
D £68,001 to £88,000 9/9 100% £1,268
E £88,001 to £120,000 11/9 122% £1,550
F £120,001 to £160,000 13/9 144% £1,832
G £160,001 to £320,000 15/9 167% £2,113
H £320,001 and above 18/9 200% £2,536

In Wales, the bands were re-set on 1 April 2005 by the National Assembly for Wales, based on 2003 valuations. In addition to revising the band boundaries upwards, an extra band was added. This article is about the country. ... is the 91st day of the year (92nd in leap years) in the Gregorian calendar. ... Year 2005 (MMV) was a common year starting on Saturday (link displays full calendar) of the Gregorian calendar. ... Established 1999 by the Government of Wales Act 1998 Presiding Officer Lord Elis-Thomas AM (Plaid) Since May 12, 1999 Deputy Presiding Officer Rosemary Butler AM (Lab) Leader of the House Carwyn Jones AM (Lab) Chief Executive and Clerk to the Assembly Claire Clancy Political parties 6 Welsh Labour (26...

Band Value[10] Pre-2005 value[7] Ratio[8] Ratio as %
A up to £44,000 up to £30,000 6/9 67%
B £44,001 to £65,000 up to £39,000 7/9 78%
C £65,001 to £91,000 up to £51,000 8/9 89%
D £91,001 to £123,000 up to £66,000 9/9 100%
E £123,001 to £162,000 up to £90,000 11/9 122%
F £162,001 to £223,000 up to £120,000 13/9 144%
G £223,001 to £324,000 up to £240,000 15/9 167%
H £324,001 to £424,000 £240,001 and above 18/9 200%
I £424,001 and above 21/9 233%

In Scotland, the current bands are This article is about the country. ...

Band Value[7] Ratio[8] Ratio as %
A up to £27,000 6/9 67%
B £27,001 to £35,000 7/9 79%
C £35,001 to £45,000 8/9 89%
D £45,001 to £58,000 9/9 100%
E £58,001 to £80,000 11/9 122%
F £80,001 to £106,000 13/9 144%
G £106,001 to £212,000 15/9 167%
H £212,001 and above 18/9 200%

Rates

England rates for Band D. For other uses, see England (disambiguation). ...

* The average is for 2006, whereas the individual listings are for 2008.
* Some council areas have special rates for certain zones within the council.

Council Area Band D Rate  % of 2006 Avg As at
Wandsworth[11] £676.16  ? 2008
Westminster £681.68  ? 2008
Kensington & Chelsea £1031.15  ? 2008
Southwark £1,180.94  ? 2008
Average £1268 100% 2006
Lambeth £1,187.23  ? 2008
Hammersmith & Fulham £1,193.33  ? 2008
Islington £1,219.40  ? 2008
Camden[12] £1,300.52  ? 2008
Ealing £1,344.10  ? 2008
Croydon £1357.64  ? 2008
Hounslow £1394.53  ? 2008
Richmond £1490.60  ? 2008

Discounts

Main article: Housing Benefit

Individuals may apply to their local authority for council tax benefit, and subject to eligibility, will receive contributions to cover their tax liability. Payments are made direct to their council tax account, and no cash is paid to recipients. Local authorities receive funding from the Department of Work and Pensions to both administer the council tax benefit system, and to cover payments. There may be further modifiers in certain circumstances, for example a discount for unoccupied property, a 25% discount for single occupants, or a total dispensation for diplomatic residences and residences completely occupied by students. Housing Benefit is a means tested social security benefit in the UK that is intended to help people with low incomes and low savings pay for rented accommodation. ... The Department for Work and Pensions is a department of the Government of the United Kingdom, created on June 8, 2001 from the merger of the Employment part of the Department for Education and Employment and the Department of Social Security. ...


How Council Tax is spent

Further information: Local government in England, Local government in Wales, and Local government in Scotland

Although it is the only tax which is set by local government, the Council Tax contributes only a small proportion (25%, on average) of local government revenue. The majority comes from central government grants and from business rates which are collected centrally and redistributed to local authorities. The United Kingdom is divided into four parts, England, Scotland, Wales and Northern Ireland. ... This article needs additional references or sources for verification. ... Central government or the national government (or, in federal states, the federal government) is the government at the level of the nation-state. ... Business rates are a United Kingdom tax charged to businesses and other occupiers of non-domestic property. ...


Local government provide services such as police, fire, recycling, refuse collection and removal, schools, leisure centres, park and ride schemes, parks and open spaces, street cleaning, subsidising of public transport, tourism, museums, social housing grants, housing and council tax benefits, environmental health and food safety in pubs, restaurants and shops, planning services, support for voluntary groups, meals on wheels, facilities for young people, adapting homes for disabled people, play centres for children, cctv installation, sports facilities, issuing taxi licences, flood defences, and many others.


A significant proportion of local government services are stipulated by central government in the form of statutory provision. Local councils are obliged by law to provide these services. The remainder of services are discretionary and are determined by the local council.


Criticism

Council Tax is criticised for perceived unfairness in not taking into account the ability to pay (see regressive taxation). These critics point out that while the capital value of the property in which a person lives might give some indication of the relative wealth of the individual, it does not necessarily relate to current income. A regressive tax is a tax which takes a larger percentage of income from people whose income is low. ...


Critics also claim that Council Tax has a disproportionate impact on renters, or those occupying part-owned social housing. They are paying tax according to the value of a property that they may not have been able to afford.


Equally, the tax isn't actually particularly proportionate even to property values. A band H property will pay at most three times as a band A, even though the value of the property may be ten or more times higher.


Whilst the tax may have regressive characteristics, supporters point out that there is a significant means tested benefit regime in place which offers rebates to those on low incomes. This has the effect of making the tax less regressive.


The Liberal Democrats have proposed a system of local income tax to replace Council Tax, however when such a scheme, the Scottish Service Tax, was proposed for Scotland, they opposed it. Critics of that suggestion have claimed that administering such a system independently of the national tax system would impose significant costs for government and business would significant erode the value gained from it as a source of local government income. Conversely, administering a local income tax as part of the national tax system would leave local taxation entirely under the control of central government. The Liberal Democrats, often shortened to Lib Dems, is a liberal political party in the United Kingdom formed in 1988 by the merger of the Liberal Party and the Social Democratic Party; the two parties had already been in an alliance for seven years prior to this, since not long... The Scottish Service Tax is a proposed replacement for the Council Tax in Scotland. ...


Another alternative scheme would be to allocate all funding directly from central government finances - already around 75% of local authority income is from central budgets. The biggest argument against this is that it removes fiscal independence from local government, making them mere service providers. However, since local government in the UK has no constitutional guarantee, and is shaped entirely by the whim of central government, some critics argue that local authorities can never be independent of central government.


2007 media claims: "Millions may have overpaid"

An edition of the current affairs programme Tonight with Trevor McDonald on 26 January 2007[13] investigated whether millions of homes had been placed in the wrong band in the original 1991 valuation. It was shown that the banding valuations were often done by 'second gear valuations', in other words valuations were often done by driving past homes and allocating bands via a cursory external valuation. The programme followed case studies of a system devised by the presenter Martin Lewis, published on his website in October 2006, who had received thousands back in back payments after appealing their band allocations. This Council Tax Cashback[14] system was said to have the potential to reach millions and received wide spread publicity, likely to encourage people to challenge the system.[15][16][17] To date there has been no information published on how many have been successful in obtaining a reduced banding. Tonight or Tonight with Trevor McDonald is the name of a British television newsmagazine, anchored by Sir Trevor McDonald and produced by Granada Television for the ITV network since 1999, when it replaced the long-running investigative series World In Action. ... is the 26th day of the year in the Gregorian calendar. ... Year 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the AD/CE era in the 21st century. ... Martin Steven Lewis (born May 9, 1972 in Manchester, England) is a journalist, television presenter, website entrepreneur and author in the United Kingdom, who specialises in ways to save money. ...


Notes and references

  1. ^ Communities and Local Government - Council Tax: The Facts
  2. ^ Council Tax in ScotlandScottish Government publications
  3. ^ Council Tax a guide Valuation Office Agency
  4. ^ BBC News - Council tax bills to rise by 4.5%. 27 March 2006.
  5. ^ Council tax revaluing is shelved, news.bbc.co.uk
  6. ^ Lyons Inquiry Press Notice: 6 December 2006, [1]
  7. ^ a b c Nominal value as at 1991
  8. ^ a b c The ratio governs the relationship between the bands. For example, a Band B property will pay 78% of the charge set for a Band D property in the same area.
  9. ^ Based on average Band D rate as of 2006
  10. ^ Nominal value as at 2003
  11. ^ Plus "Commons" area surcharge
  12. ^ Plus "Commons areas" surcharge
  13. ^ http://www.itv.com/news/tonight_004ae25293cb8a3cc3a771af961dbcaa.html
  14. ^ MoneySavingExpert.com. Council Tax Reclaiming.
  15. ^ [2][dead link]
  16. ^ Millions could be eligible for council tax refund | Money | guardian.co.uk
  17. ^ 'Millions' owed tax handout | The Sun |HomePage|News|Sun Money

is the 86th day of the year (87th in leap years) in the Gregorian calendar. ... Year 2006 (MMVI) was a common year starting on Sunday of the Gregorian calendar. ...

See also

  • Local income tax

The Scottish Executive plans to bring forward legislation to replace the council tax with a local income tax (LIT), as part of the funding for Scottish local authorities. ...

External links

  • Council Tax, from the Valuations Office Agency
  • Pay your Council Tax online, from Directgov
  • Council Tax payments, discounts and appeals, from Directgov
  • IsItFair - the UK Council Tax Protest Group
  • Axe The Tax - Liberal Democrat anti-Council Tax website
  • Ministerial correspondence relating to council tax in the financial year 1991-2 HM Treasury disclosure under the Freedom of Information Act
  • Check if you're in the right council tax band
  • Office of Deputy Prime Minister Released Council Tax Figures

  Results from FactBites:
 
Council tax - Wikipedia, the free encyclopedia (1305 words)
The Council Tax is the main form of local taxation in England, Scotland and Wales.
As of 2006, the annual levy on a Band D property is between £1,000 and £1,500 in England, with the exception of Inner London where the average annual council tax per dwelling is roughly £700 to £1,400.
Council Tax is criticised for perceived unfairness in not taking into account the ability to pay (see regressive taxation).
Council Tax - definition of Council Tax in Encyclopedia (255 words)
The Council Tax is the main form of local taxation in the United Kingdom.
Each dwelling is allocated to one of eight bands coded by letters A through H on the basis of its capital value (as of 1 April 1991).
Although it is the only tax which is set by local government, the Council Tax contributes only a small proportion of local government revenue.
  More results at FactBites »

 
 

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