What is Council Tax?
Council Tax is a local administered tax which is paid to the Local Authority and used towards funding local services such as schools, policing and waste collections.
Each residential property in the UK is set within a band by the Valuation Office, the charge for each band is set annually by the Local Authority.
You can find the band of any property using this website.
Each Local Authority displays it’s rates publicly (this example is for Birmingham), and writes to the home owner or occupant each year to advise them of the new rates and provide options about how to pay.
The tax is charged per household. This means, at least one adult lives at the property. There are exemptions, which are covered in detail below.
Who is responsible for the bill?
Owner occupiers
If the property is occupied by the owner, they are responsible for dealing with, and paying, the Council Tax if necessary.
Rented – Joint and Several
If the property is rented on a joint and several basis, (i.e. one tenancy covers the whole council tax unit), Councils general allow landlords to transfer the legal responsibility to the tenants. Submitting copies of tenancy agreements to the Local Authority is the best way to notify the council of any changes.
Crucially, there does not appear to be a legal right for landlords to be able to transfer responsibility in this way so there is a possibility that Councils could claim against landlords in the future.
Even if you supply tenancy agreements to the local authority, they may accept an early departure date from the tenants which will leave you with the obligation to cover the remaining Council Tax bill.
In order to avoid both of these issues, we suggest that landlords require proof from the tenants showing that they have dealt with the council tax obligation before returning their deposits. Tenancy agreements must be updated to include this obligation on the tenants.
Rented – Individual tenancies
Where a property is classed as a House of Multiple Occupation (HMO) for council tax purposes, the responsibility for dealing with Council Tax falls to the landlord.
Please note, that this definition is different from other definitions of HMO:
Definition of HMO for Council Tax purposes
This definition is from legislation for England and Wales.
“a dwelling inhabited by persons who do not constitute a single household, each of whom either–
(a) is a tenant of, or has a licence to occupy, part only of the dwelling; or
(b) has a licence to occupy but is not liable (whether alone or jointly with other persons) to pay rent or a licence fee in respect of the dwelling as a whole.”
Dealing with a HMO
In general, if a property is let with more than one tenant and they are on separate tenancy agreements or licences, the landlord is responsible for dealing with the council tax.
In those circumstances, landlords can increase the rent charged to tenants to cover the council tax that they will be required to pay directly to the council. If the tenants do not pay the cost of the council tax, the landlord is still obliged to pay the tax in full to the council.
If the tenants are entitled to exemptions from council tax (being full time students), then the landlord can apply for the exemption on behalf of the tenants to avoid having to pay the Council Tax.
Discounts
Students
If all occupants of a property are full-time students and match the requirements below, then they don’t have to pay Council Tax. If they receive a bill, then they should apply for the exemption to be applied to them.
To qualify as a full-time student, their course must:
- Last as least one year
- Involve at least 21 hours of study per week
If the house is occupied by a mixture of student and non-student tenants, then the exemption doesn’t apply. This is the case even if there is only one non-student. However, the single occupancy discount may apply. This entitles the household to a 25% discount.
It is important to note that some councils are very strict about the end dates for students who are studying. For example, if a group of student tenants have a tenancy which ends on the 30th June, but one of their courses ends on the 15th June, some councils will charge the remaining 15 days of the month and some won’t.
Single occupancy discount
If a resident lives alone or if everyone else in the property is exempt (either below 18, or studying full time as in 2.1 above), then the tenant is entitled to a 25% off their Council Tax bill.
A full list of exemptions can be found here: https://www.gov.uk/council-tax/who-has-to-pay
Residents will need to apply for a discount, which they can do here: https://www.gov.uk/apply-for-council-tax-discount
Second homes and empty properties
Individual Local Authorities are able to use their own discretion about whether a property owner needs to pay council tax is vacant or a second home. They have powers to charge higher tax for empty properties.
Below, are the rules for each of the cities we operate in.
Birmingham City Council
Vacant properties: No discounts for vacant properties.
Properties empty and unfurnished for two years or more attract charges of 150% of normal council tax. ()
Second homes: No discounts apply.
See the Birmingham City Council website for reference.
Nottingham City Council
Vacant properties: No discounts for vacant properties. Properties empty and unfurnished for two years or more attract charges of 150% of normal council tax.
Second home discount: If your second home is job-related, that is, your employment contract required you to live in the property, you may be entitled to a discount of 50%.
Bristol City Council
Vacant properties: No discounts for vacant properties.
Properties empty and unfurnished for two years or more attract charges of 150% of normal council tax.
Second homes: No discounts apply.
Cardiff City Council
Vacant properties: Council tax is not charged for the first six months a property is unoccupied and unfurnished, a 50% reduction applies after the first six months.
Second homes: Discounts apply if the liable person is also liable at another property which is job related.
Other exemptions can be found here.
For questions about managing your student property, you can speak to one of our accommodation experts about how we can help manage your student properties. Simply fill in the form on our landlords page and one of our dedicated relationship managers will be in touch.