It’s one of the most controversial taxes we pay, so what do we get for our money and how can we cut our council tax bill? Jo Cooper reports

It’s arguably the most unpopular tax we have to pay, and it’s easy to see why.

Thousands of homes still remain in the wrong bands with people paying more than they should, while regional variations in the cost of council tax make for uncomfortable reading, especially for house-rich, cash-poor pensioners.

While it’s easy to criticise the current system of local government funding, finding a viable alternative possibly based on people’s income as well as their property has been rejected by the government following Sir Michael Lyon’s Inquiry. So council tax is here to stay.

This year at least, however, ministers have told local authorities to keep council tax increases below five per cent or a cap will be imposed on them. That means a rise of around £41 for a Band D property this year.

Margaret Eaton, chairman of the Local Government Association (LGA), said: “This is the lowest rise for more than 15 years and works out at 79p a week, less than a loaf of bread.”

What does council tax pay for?

Council tax raises about £25bn and supplies part of the money that is required to provide local services. These include policing, fire services, rubbish collection and recycling, maintenance of parks, education, court services and keeping our streets clean. Not all the money that is needed by local councils is raised through council tax. Central government provides local councils in England with more than £70bn (in 2008/09) in various grants to enable them to deliver all the services that we expect.

How the bill is worked out

Local authorities are responsible for setting their budgets for the year and deciding how much needs to be met through council tax.

The amount of council tax you pay is based on how much money is needed and the value of your property. All properties were valued and put into a ‘valuation band’ (in England these bands are based on their value on April 1, 1991).

What does my council do for me?

Many of us wonder just where our council tax gets spent and why we have to fund services that we never use ourselves. As one Choice reader wrote: “Why must I pay for education services when I don’t even have children?”

Unfortunately, opting to only pay for certain services is not allowed, but you can find out how your local authority spends your money. In fact, local authorities often produce leaflets explaining just that. If you have a particular question you want answered, however, you can always write to your local council or get in touch with it online.

Under the Freedom of Information Act, you have the right to ask for information held by any public authority, including your local authority.

How to reduce your council tax bill

There are various ways you can help minimise your bill or even pay nothing.

1. Challenge your council tax band

The valuation band your home falls into determines how much council tax you pay. These bands are based on the value of your property back in April 1991. As the valuations were done quickly, however, it’s thought that thousands of properties may have been placed in the wrong band, with the result that many of us are paying too much council tax.

So, if you think your home may be in the wrong band, it is well worth challenging this.

The easiest way to see if your property is in the wrong band is to check what band your neighbour’s house falls into (assuming their house is similar to your own). If you don’t want to ask them, you can go onto the Valuation Office Agency’s website and type in their address (www.voa.gov.uk/cti). If you discover they are in a lower band, you may have a claim.

The next step is to call or write to the Local Listings Officer at your local authority. Alternatively, you can appeal via the Valuation Office’s (website: www.voa. gov.uk). Assuming you are successful with your claim, you’ll not only get a lower council tax bill, you’ll also be entitled to backdated repayments from when you first moved into the property (as far back as 1993 when the tax started). For more information and tips on challenging your council tax, take a look at Martin Lewis’ excellent website: (www.mon eysavingexpert.com).

2. Claim council tax benefit

If you’re on a low income (below £16,000), you may be able to claim council tax benefit. People on low incomes can get a reduction or even be exempt from the bill.

According to Age Concern, up to 2.3 million pensioner households are missing out on council tax benefit that could cut their bill by an average £730 a year.

The charity is calling on the government to remove the £16‚000 savings threshold as it says many people miss out on the benefit because of modest savings.

As a general rule, if you’re entitled to income support, guarantee pension credit or income-based jobseeker’s allowance, you’re likely to get your council tax paid in full. If you don’t receive these benefits, but are on a low income, you may still get some council tax benefit (CTB). Your local council will assess how much income and capital you have‚ and whether you are able to get any benefit.

Second adult rebate is different from main CTB. It is not based on income and capital, but on whether you have a second adult in your home and what their income is. It could reduce your bill by up to 25 per cent.

3. Claim single person’s discount

Your full council tax bill is based on at least two adults living in a home. If only one adult lives in a home, the council tax is reduced by 25 per cent. (The bill doesn’t increase if there are more than two adults in the home.) So if you live by yourself in a property, make sure you claim a single person’s discount of 25 per cent. Get in touch with your local authority for a claim form.  Other discounts exist for people looked after by a carer (though not  a carer spouse). For example, if just you and a carer live in your home, a 25 per cent single person discount may apply.

People who are severely mentally impaired are also entitled to a council tax reduction. To be eligible, the person will need a doctor’s certificate saying they are severely mentally impaired and that they receive one of a long list of benefits, which include disability living allowance care component at the middle or highest rate, attendance allowance, constant attendance allowance, severe disablement allowance and several others. The full list is available at (www.direct.gov.uk).

4. Get a reduction because of a disability

The disabled band reduction scheme aims to ensure disabled people do not pay more council tax because they live in a larger property than they would have needed if they were not disabled. There are certain requirements for this. For example, the property must have at least one of the following:

• An additional bathroom or kitchen required to meet the needs of the disabled person
• A room (other than a bathroom, kitchen or toilet) required to meet the needs of the disabled person, and used predominantly by them
• Extra space inside the property to allow for the use of a wheelchair – wheelchairs for outdoor use only are excluded.

If your home is deemed eligible, your bill will be reduced to that of a property in the next council tax band down.

5. Check other exemptions

In certain situations, your property may be exempt from council tax or qualify for a discount. For instance, empty, unfurnished properties can be exempt for six months, while unoccupied buildings undergoing major repairs to make them habitable are council tax-free for up to a year.

There is also an exemption on properties that have no one living there because they have had to go into a care home, hospital or move in with relatives.

If you have a furnished holiday or second home, you are still liable for council tax but at a reduced rate. Councils have to give a discount on second homes of between 10 and 50 per cent.