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April is the cruellest month

Another year means another council tax rise. Clifford German looks at the story so far
COUNCIL TAX bills traditionally drop on doormats in early spring, shortly after the Budget, and bills almost always rise by more than the rate of inflation, allowing the government to show selected local authorities in a poor light.

This year is no exception. Rural councils will face average increases of 12 per cent, urban areas around 8 per cent and London boroughs 5 per cent. As usual there is a big variation from the "best" to "worst" councils. Some taxpayers will face increases of up to 25 per cent while a handful of councils including Lambeth and Hackney will be charging less than last year.

Councils raise less than 20 per cent of their annual spending power through local taxes and depend heavily on their share of the national business rates and on central government grants to finance their spending and window dress the tax burdens they impose on their people. Even so, central government reserves the right to cap council spending to prevent rogue councils spending more than central government considers prudent.

Margaret Thatcher's Conservative government favoured Westminster and Wandsworth in order to emphasise the contrast between Tory flagships and the profligacy of "loony" Labour councils such as Lambeth and Brent. This year, New Labour claims to have introduced a fairer and more relaxed system of controls on council spending, but that seems to have favoured urban areas and added to the discontent in the rural shires.

Council tax itself is a property tax paid by the occupants, unlike rates which were the responsibility of the owners of properties, and the community charge, which was literally a poll tax on every adult, regardless of how much he or she earned or owned. The precise amount householders pay depends on the total amount each council needs to raise and the estimated value of all the housing stock in the council area back in 1991.

To simplify the system, properties in each council area are grouped into eight different bands ranging from band A for properties in England worth less than pounds 40,000 up to band H for properties worth over pounds 320,000. Lower scales apply in Wales and Scotland.

In every case the council sets an appropriate rate for properties in band D and bases the other bands on that. Properties in band A pay 66.6 per cent of the band D figures, band B 77.7 per cent, band C 88.8 per cent, band E 122.2 per cent, band F 144.4 per cent, band G 166.6 per cent and band H twice the band D figure.

Basing the tax on property values back in 1991 caused instant unrest because most property prices were falling at the time. Home owners felt their houses were put into too high a category but relatively few were determined enough to exercise their right to appeal within 12 months. Now only new owners and tenants can appeal, and only within six months of moving into a property.

In the last 12 months property values have finally risen above 1991 levels, but the inconsistencies have increased because some properties have risen in value much faster than others, and councils have ruled out revaluations because of the sheer cost of recalculating current values.

All adults living in a property are liable to contribute to the bill and anyone who lives alone can get a discount of up to 25 per cent. Disabled people also qualify for a discount, and people on low incomes are eligible for help from the council. Pensioners have to pay but children are exempt even if they are working. Anyone on benefit, including the unemployed, is eligible for help from the DSS.

Empty properties are exempt for up to six months if they are undergoing repairs or renovation. Empty homes are not taxed if the resident is in hospital or residential care, but other empty properties such as holiday homes are assessed at 50 per cent of the normal rate.

Most councils allow taxpayers a choice of paying weekly, monthly or annually, and some will allow you to choose the date you pay to coincide with your pay cheque. Most councils will divide the annual bill into 10 monthly instalments starting in April and finishing in January. More and more councils also offer discounts of between 2 per cent and 5 per cent for taxpayers who pay by direct debit and for those who pay in full as soon as they receive their bills.

Dodging the council tax is nothing like as easy as evading the poll tax was because the householder has nowhere to hide. If you fail to pay, the council will issue a summons, sometimes with great alacrity, catching unawares anyone who goes on holiday at the wrong time.