Council Tax for New Builds

Published by UK Property Accountants
Published Date: May 6, 2024
Categories: Council Tax

Council Tax is a tax on domestic property in the United Kingdom and is used to fund local services such as rubbish collection, road maintenance, and police and fire services. Council Tax is a local tax payable on all residential properties in the UK, including newly built homes. The amount of council tax you pay depends on the value of your property and the area you live in.

How is Council Tax Calculated on New Builds?

Council Tax is determined based on the valuation of buildings, according to their market value in 1991. The value of similar properties at that time (1991) is considered for new builds.  

The builder communicates the property's current value to the local council authority. Subsequently, the local council notifies the Valuation Office Agency (VOA), which assigns a valuation band to the property. If the VOA needs more information to determine the band of a property, they'll arrange a visit. Council Tax is then calculated based on this assigned band. There are eight council tax bands, labelled from A to H. Below is the classification of council tax bands along with their respective valuations:    

Band

Value on 1 April 1991

A

Up to £40,000

B

£40,001 to £52,000

C

£52,001 to £68,000

D

£68,001 to £88,000

E

£88,001 to £120,000

F

£120,001 to £160,000

G

£160,001 to £320,000

H

More than £320,000

Council Tax is subsequently calculated based on the rates set by the Local Council to where the property belongs. Each local council establishes its council tax rates for the different bands. Individuals across the council will pay varying amounts for the same valuation band.

A property with a valuation of £100,000 will have to pay £2,820 in Liverpool city while £2,329 in Birmingham. It would be best to refer to your local council to determine the specific tax rates applicable to your area.

What If My Property has been Assigned More Value?

What If My Property has been Assigned More Value?

If you believe your property has been overvalued for council tax purposes, you can challenge the Valuation Office Agency (VOA) and request a reassessment of your home's band. To support your challenge, you'll need to provide evidence supporting your claim.

You must provide addresses for up to five comparable properties in a lower band than yours. These properties should closely resemble your own in terms of type, size, age, style, and design. Additionally, the properties should be located either on the same street, in the same estate (for town or city dwellers), or in the same village (for those in rural areas).

Upon receipt of your challenge, the Valuation Office Agency (VOA) typically acknowledges its reception within a few days. The VOA will contact you if they need additional information regarding your challenge. The entire review process can take up to 2 months. Following the review, the VOA will take one of the following two actions:

  • To change your council tax band, your local council will update your bill and make adjustments to your payments, or
  • Provide reasons why your band cannot be changed.

If you remain dissatisfied with the decision, you can appeal to the valuation tribunal at your own expense. You will be told if you can appeal and how to do this in the decision you receive from VOA.

When is Council Tax Due on New Builds?

Council Tax is due on new builds from the Completion Date onward. It is the builder's responsibility to inform local council authorities of this date. During the construction phase of a new build, council officials conduct site visits to assess the ongoing work. Only when the property is structurally complete is the council issued a completion notice stating that the remaining work is expected to be finished within the next three months. This notice specifies the completion date, which becomes the basis for the property owner's council tax payments.

Council Tax Bills are payable from the start of the financial year in April and are structured into ten monthly instalments. While February and March are tax-free months, allowing councils to collect overdue payments, those obligated to pay council tax bills can request 12-month instalments from their local council. This flexibility helps make payments more manageable by reducing spending on each instalment.

How to Avoid Council Tax?

In the UK, Council Tax is mandatory, and you cannot avoid paying council tax to authorities. Suppose an individual intentionally fails to make council tax payments without informing the council of their circumstances. In that case, they will receive a reminder notice to settle their payment within the next seven days. Failure to comply may result in the full payment of the annual tax on the individual.

Continuous non-payment of council tax can lead to legal action initiated by the council. They may issue a liability order, a legal demand, to clear the outstanding dues. Any legal fees incurred during this process will be added to the defaulter's council tax bill.

The council may deploy enforcement agents to seize the defaulter's property as a last resort. If there is no valid reason for failing to pay council tax, the defaulter may face imprisonment for up to 3 months.

Conclusion

Understanding Council Tax implications for new builds and their payment is crucial, as failure to make payments and notify may result in harsh consequences. You cannot avoid paying council tax, but you can appeal to address the issue if you believe your property has been incorrectly valued.

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