I'm a former resident of the UK, and would like to understand a bit more about this thing called the Coucil Tax. From what I understand is, that if you buy a house, then the local government will tax you based on last valuation of that property. Is that right ? If as a non-resident, I purchase a property, do I still have to pay that tax ... or if I let the property, does the tennant ?
Anyways, seems a bit of a strange tax - properties aren't revenue generating so to tax based on value of property is forcing the occupier to either sell or generate revenue from the property... kinda screwed up and makes me wonder how people manage back in the UK.
Generally taxing an immovable object is a simple and efficient form of taxation. Generally property reflects means. The bigger the house the more affluent the occupier though the present system penalises the smaller house and advantages the large stately home. There is also a reduction for low income occupiers which becomes zero if below a threshold limit.
Council tax funds a quarter of local government expenditure, business rates fund a further quarter, and the other half is made up from central government funds (derived from general taxation, mostly from income tax and VAT).
No, that's not quite true. Liability is not directly tied to ownership.
Also, the tax is not based on "last valuation" in the same sense that what you pay for the property when you buy is a valuation. There was last a "global" valuation of properties for council tax purposes in April 1991 (Scotland, might be different for England), which involved no actual specific value estimate assigned to each property, but only placement into one of eight value ranges, called bands. Band A is the cheapest, H the most expensive, and D the "average". Inevitably this led to squabbles with people who thought their value was borderline and had been assigned into the higher instead of lower band.
However, if there is a re-valuation, which I think is due soon, and everyone's houses are suddenly going to be deemed worth, say, four times what they were worth in 1991, this doesn't mean that people's council tax bills will rise four-fold. All that happens is that, as before, each household pays a share of (a quarter of) the size of the local council's budget, that share being in roughly the same ratio as the value of the house they live in is to the sum of values of all the houses in their council's area.
Yes to both. Normally the tenant pays, but if the property is not occupied, then the owner pays, usually at a discounted rate.
Well, the theory is that properties are in fact revenue consuming, in that most people pay rent, and most of those who don't, because they own, instead make mortgage repayments which are in broadly the same ballpark.
The theory goes that people who can afford bigger rents or bigger mortgage payments, which after all are funded from their income, can also afford to contribute more to the cost of local government. So basing the level of this tax broadly on the value of the house, indirectly links it to their income and ability to pay.
Well, this is indeed one of the disadvantages of the system, because it creates anomalies which put some people at a disadvantage, typically pensioners whose incomes grow at a slower rate from year to year (if at all) than does the local authority budget and hence the council tax. The somewhat cruel assumption is that they should uproot themselves from the house they've lived in for most of their working lives and move into a cheaper retirement home.
The 1991 valuation at the moment. They are being revalued currently and from
2007 (IIRC) you'll be taxed on the new valuation.
The tenant. If you leave it empty then you pay (I think you can leave it empty for 6 months between tenants without paying).
You've obviously been out of the UK for too long and have forgotten the screwed up British attitude to property. Most people in the UK seem to see property as an easy and guaranteed way to make money.
Many are even daft enough to think that buying a much bigger house than you need, or buying a second home and leaving it empty for 95% of the year, is a good long term investment. Such people are the main cause of the housing shortage we are suffering. I've just read this report on the BBC web site which highlights the problem some areas are facing:
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Hopefully rising interest rates, rising council taxes and stabilising house prices will have the desired effect....
Some have difficulty. There is council tax benefit for those on low incomes.
I'd prefer a housing tax system with a similar principle to income tax and VAT. For income tax you are allowed to earn a certain amount (nearly 5000) before paying any tax, with VAT you can purchase most essentials without paying VAT (eg food, rent etc). There should be something like a "spare room" tax, where you are able to live in a house up to a certain size free of council tax but for every non essential room you are taxed, using some simple formula taking account of number of occupants.
Hmmm. Methinks, were that the case, that Kirsty's idea of knocking down every non-load bearing wall (plus some load-bearing ones!) would become extremely popular! Houses would suddenly have much fewer, but bigger, rooms...
kinda falls over though if the bigger house mortgage payments swallow up the extra income. Size of house is no measure of disposable income, VAT's better at that.
Ireland has no rates at all, now there's a thought.
A better idea may be to base it on the land area occupied (multipied by stories). Each person has a "tax free" allowance of house area, and is taxed on anything above this.
But I doubt any government has the balls for anything like this. They seem intent on letting more and more of our shrinking countryside get ploughed up to build more houses and more houses - not because our population is expanding but because the number of people per property is decreasing.
What about people who work from home, and hence need more room than just for living?
What if they only work from home "part-time" - if it's not feasible to constantly convert the working space between personal & business use, do you allow them the extra space full-time or only part-time?
What if their business expands/contracts (eg seasonally) - do you constantly change their "allowed space" accordingly?
Would you also count up (size & number of) pets, when deciding allowable house area?
It generally correlates fairly well with income. Disposable income is a whole nother kettle of worms, being what's left of income after all essentials have been paid for, but those essentials include the cost of housing, *including* rates and bills. So if you've badly botched up your budgeting, size of house could well correlate negatively with disposable income.
Good for them. Don't get me wrong, I'm dead against council tax myself, and think the cost of local services should be borne 100% from the central tax kitty, and I don't believe there should be any local taxes at all. Local government should be lightweight, and concerned with prioritising, and if necessary with making competitive cases to central funds disbursars if they feel special needs for more than the average share, but they should have no revenue-raising powers of their own at all. Generally all services throughout the country should be of a similar standard, so that when you wish or need to move from one part of the country to another, standards will be the same.
School education is by far the biggest consumer of the local budgets, and, frankly, there is no good reason why education should be subject to political control, and certainly not *different* political control in different places.
It would happen, check out all those older houses with bricked up windows...from when there was a window tax in what, the 1800's?
Many years ago I was in Spain and there were *lots* of houses with the top stories not finished even though the house was obviously lived in. I was told that there was a tax payable when the house was completed :-)
You must be joking! The only reasonable to Council Tax is a Local Income Tax. The LibDem's proposal means that about 50% will pay less (many paying nothing at all), about 25% paying about the same, with the rest paying more.
If there really was correlation between size of house and family income, well, those figures of 50%, 25% and 25% would actually be 0%,
There is never just one reasonable alternative. I happen to think that *all* local taxation is unreasonable. It's enough to have one national income tax, with all local government expenditure being funded from the central pot (instead of as now half of it).
No, they wouldn't. Do you know what correlation is?
If part of the house is necessary for business then I guess business rates should apply not council tax to that part. If it's used for both some sort of proportioning.
No. Pets don't pay tax, nor did they, nor will they, so they should be ignored when assessing any tax.
Surely it's just a consumption tax of the space you use to live in, I don't see it as wholly illogical, I much prefer being taxed on consumption, and if you choose to consume more, you should be taxed more.
Same principle as "Rates" if your UK experience goes back that far.
Another idea would be that adults roughly cost the council the same amount in terms of rubbish, roads, schools etc. If you take special measures for students and OAPs it would seem fair to charge all "adults" a standard fee for the services provided. Nobody could complain about that could they? ;-)
Part of the problem with any change would be that the council would probably use the change to increase the overall revenue. If the average couple paid
100 in rates then they would be charged 75 each for Poll Tax / Community Charge.
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