People who live in around 450,000 homes in Wales would see an increase in their council tax bills as part of the Welsh Government's plans to reform the tax. Ministers today published details of the three options they are looking at for changing council tax in Wales.
The Welsh Government says its plans will make the system fairer and have outlined three different levels of change; minimal, modest or significant. The Welsh Government says this is not a way to make more money and that it doesn't intend to change the total amount of revenue collected in council tax, but to make the system fairer. While not everyone would see changes, there will be "winners and losers".
One of the three options would only see properties revalued and no change in the relative burden on people in more expensive and less valuable homes. However the modest and significant proposals would both see people in more expensive houses asked to pay more with the estimate that 450,000 homes would have higher council tax bills.
The most radical option would also see council tax revenue effectively redistributed around Wales so that wealthy areas like Monmouthshire and the Vale of Glamorgan pay more overall to enable areas like Blaenau Gwent to collect less in council tax from their residents.
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How does it currently work?
There has already been one consultation, which had 1,000 responses, and a second phase consultation has opened today and will run until February asking how and when changes should be made and update the property valuations used.
There are around 1.5 million homes in Wales liable for council tax. Each property is currently placed in one of nine tax bands, A to I, on the basis of property values on April 1, 2003. This is because the last time council tax was updated in Wales, the changes took effect on April 1, 2005. As part of those changes, the Welsh Government added an additional tax band (Band I) to capture the highest value properties. Council tax in England and Scotland is still based on 1991 property values and eight tax bands.
The Valuation Office Agency (VOA), which is independent of the Welsh Government, assesses property values and places each dwelling into a council tax band. Each band is charged a tax-rate relative to the reference point of the system, band D. However, the band D charge for each area is set locally by councils each year, depending on how much money they need to raise to fund services in their area.
Over 70% of properties are in bands A to D. The current highest band D rate in Wales is Blaenau Gwent (£2,182) and lowest is Caerphilly (£1,693). For the latest politics news in Wales sign up to our newsletter here.
The Welsh Government say property occupation is a good broad indicator of people’s wealth relative to each other, whilst being a tangible, simple and local measure. The homes we live in also provide an indicator of household size and therefore relative demand for services. "We recognise it's not perfect, as there are many reasons for the size and location of the properties we choose to own or rent.
"However, the council tax system has important elements which take account of income, such as the one-adult discount and support for low-income households."
Why should it change?
The Welsh Government say the current system is outdated and places an unfair burden on those who live in lower valued properties. The amount of council tax charged for band I properties is currently 3.5x as much as band A, but homes in the top band are worth at least 9 times as much as those in the bottom band.
Will my council tax automatically change?
No. The Valuation Office Agency is preparing up-to-date values for all 1.5 million properties in Wales. Even if your property's value has increased over the last 20 years, this doesn’t necessarily mean your council tax bill would increase. It would depend if it has increased relative to other homes in Wales.
Under the more radical two of the three suggestions being put forward, 450,000 homes would pay more. It is not yet known how many properties would be liable for smaller charges.
What are the new plans?
This consultation document puts forward three ideas:
Option one: "Minimal change"
In this approach, the current system would remain largely the same. Properties would be revalued and the same percentage of properties in each band would remain but band thresholds would be updated.
The system would become more up-to-date and accurate under those rules. About eight out of 10 households would see bills reduced or experience minimal change but the consultation says under this the "tax would remain fundamentally unfair, with only the modest improvement on the system as originally introduced in 1993. Some properties would move up bands, some would move down bands, and most would stay in the same band."
Option two: "Modest reform"
All nine bands would remain but be updated with current property values but the tax-rates charged for each band would change so that bills for households in lower band properties would fall, and bills for those in the highest band properties would rise.
Under this, those who are in band A, B and C, would pay less than they do now. Band D would be determined at a similar level to now by councils at and homes in band E upwards will pay more.
Again, the plans say that some properties would move up bands, some would move down bands, and most would stay in the same band.
Option three: "Significant" reform
This would see the number of bands go up from nine to 12, with one more band at the bottom and two more at the top. The 12 bands would be redrawn to be more equal. The tax-rates would change so "a lot" less would be paid by those in the lowest bands, and significantly more paid by those in the top bands.
People living in the lowest value properties would see bills fall, and those in the most expensive properties would see bills rise. Again, some properties would move up bands, some would move down bands, and most would stay in the same band, but those reductions would be greater, especially for those living in the lowest value properties.
About seven out of 10 households would see bills reduced or experience minimal change. Again, properties in band A, B and C would pay less than they do now, Band D would be determined by councils, and E upwards will pay more.
Based on property values in April 2023, that would see a split like this:
When would this happen?
It depends and the Welsh Government are reiterating no decisions have yet been taken.
The earliest opportunity is April 1, 2025, that would be the modest version of reform and while those whose bills would fall would see the benefits straight away for those who increase, there would be a transitional scheme possibly to 2029.
The modest changes could be agreed but deferred until the next Senedd term, meaning the earliest date they would come into force would be from 2028.
Or changes could come in in in stages, starting with minimal or modest reform in the first step (the earliest a first step could be is 2025), moving to implementing the expanded version of reform in a second step (and that second step could be sometime in the next Senedd term).
Officials say it is not yet possible to say the actual figure in terms of individual bills because it is not yet decided which system will be selected or when it will come in.
Will there be further changes?
As part of this reform, the plan is to carry out updates to the property valuations and the tax bands at least every five years. And at each review, it would be possible to change bands and the tax-rates. The consultation says: "If 5-yearly intervals are successful, and the valuation technology continues to improve, we may wish to move to shorter, more responsive intervals over the longer term, such as every three years".
What about discounts?
Nearly half of households in Wales currently receive some form of discount or reduction on their council tax bill – and this will not change as a result of this consultation but a full review of all 53 categories of discounts, disregarded persons, exemptions and premiums associated with council tax is being carried out and is "part way through".
An initial high-level review identified four categories that should be prioritised for immediate consideration:
- The one-adult discount: No changes planned
- The empty property discount: Through the planned Local Government Finance (Wales) Bill the statutory 50% discount for properties with no liable resident will be removed
- The exemption for unoccupied properties where probate or letters of administration have not yet been granted: An overall time-limit for the exemption will be introduced
- The exemption and disregard for people with a severe mental impairment: The title ‘severely mentally impaired’ will be changed due to being outdated
https://news.google.com/rss/articles/CBMiU2h0dHBzOi8vd3d3LndhbGVzb25saW5lLmNvLnVrL25ld3Mvd2FsZXMtbmV3cy93YWxlcy1wbGFucy1tYWtlLXBlb3BsZS1uaWNlLTI4MTAxNjA10gEA?oc=5
2023-11-14 10:12:01Z
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