Council tax warning as shock report shows 'majority of houses in wrong band'

The majority of all houses sold in England are now in the wrong council tax band, new data suggests.

The analysis, carried out by the Financial Times, suggested more than half of properties surveyed are paying the wrong amount, with data indicating current rules mean even "modest homes" can pay more than mansions as both a proportion of their value and in cash terms. How much a household pays in council tax depends on the band their property is assigned to. The bands range from A to H, with band A reserved for the lowest value properties, while band H is for those with the highest value.

The price ranges, still based on house prices from 1991, are set nationally but tax rates are decided and imposed by local councils based on the needs of the area. Properties do not, and have not, moved bands since the levy was introduced, despite valuations significantly increasing.

According to the FT's analysis, the band D price range, which is currently applied to properties worth between £68,001 and £88,000 in 1991, would now be equivalent to £373,000 and £483,000 if increased by average national house price growth.

However, of the "tens of thousands" sold in that price bracket, the FT said just one third are in band D. After repeating the calculation process for all prices, 55% of properties were found to be in too high or too low a band.

This means thousands of households could be paying more or less council tax than they should be.

The FT has published a calculator for people to check how their bill compares in their area and nationally.

Jonathan Hinder, a Labour MP for the constituency of Pendle and Clitheroe, told the FT: "It is the most unfair tax in Britain. It is extremely regressive and very poorly understood."

The current rules and thresholds mean some of the poorest areas in Britain pay more than the richest.

For example, the FT's analysis found that of the 7,000 properties sold in England for £400,000 since January 2024, average council tax bills ranged from £800 a year in affluent Wandsworth up to £4,000 a year in Wiltshire.

In 2005, Sir Tony Blair scrapped plans for a revaluation in fear of a political backlash, and no successive Governments have approached the levy since.

Conversely, Wales has legislated for regular revaluations of its council tax bands. A full revaluation from 1991's range was carried out in 2003.

A spokesperson for the Ministry of Housing, Communities and Local Government said: "We have no plans to change council tax bands, however we will make council tax fairer for taxpayers and local authorities.

"That's why we are exploring changes to modernise the system and reform the challenge process, allowing people to dispute their bills more easily and save money."

Martin Lewis's wrong band campaign

In a separate issue, some households have been paying the wrong amount of council tax from the get-go.

Money Saving Expert founder and financial journalist Martin Lewis has been campaigning about this injustice for decades, urging Brits to compare their bills to their neighbours, based on the value of their homes.

To implement council tax quickly after the poll tax was scrapped in 1991, the Government used a "stop-gap valuation," to determine what council tax bands would be.

The process involved estate agents driving past properties and estimating values - often rushing through hundreds of properties in a week, sometimes all in a single day. This hasty process casts doubt on the accuracy of many bandings, meaning some households have been overpaying for decades.

To dispute a band, Mr Lewis's 'Check and Challenge' method comprises two steps; comparing your property's band to your neighbours, and checking the valuation of your property in 1991.

To check a neighbour's band, visit Valuation Office Agency if you're in England, or Scottish Assessors - Scottish Assessors Association website if you're in Scotland.

When comparing your band with your neighbours', make sure the properties are as similar in size and value as they would have been in 1991. If neighbours with similar properties are in a lower band than you, you may be able to make a claim.

To find out the valuation of your property in 1991, visit a property site like Rightmove or Zoopla and input your street name. You should be able to view the property's sales history.

However, Mr Lewis suggested only making a claim if your property passes both the neighbour and the valuation checks. Find out more about how to dispute a band here.