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Council tax explained

Published 25 May 2015 by

Council tax – it’s something that most people have to budget for every month, but do you actually know what it is for and how it’s used? If not, we’ve put together this quick guide to explain all.

What is it?

Council tax is a system of local taxation collected by your local authority to part-fund services in your area, such as schools, rubbish collection, roads and street lighting. Some people, such as household where everyone’s a full time student, don’t have to pay it, and others get a discount on it, depending on their situation.

How’s it calculated?

Your local Government decides how much to charge you based on the type of property that you live in. They do this by categorising all the properties into bands. If you’re in Band A then you will pay less council tax than if you are in Band B, and so forth.

Like we mentioned above, some people will get a discounted rate – single person occupancy is a good example of this. You can find out if you’re eligible for a discount here.

Am I paying too much?

If you think that you may be paying too much council tax, or you just want to check that you are in the right Band, you can go online and check either on the Government’s website. Once you’ve done this and you find that you are being charged too much, you can raise this with the Valuation Office Agency and they will check your band for you.

How do I pay it?

Unless you’ve contacted your local council and specifically asked for your payment plan to be changed so you pay your council tax over 12 months, you’ll pay it over 10 months – February and March, when you don’t pay anything towards it, is known as a ‘Council Tax Holiday’. If you’d prefer to spread the cost over 12 months, you can simply call your council and ask them to set it up that way for you.

The easiest way to pay is by Direct Debit – you just give your local council your details once and they’ll take the money you owe out of a specified bank account each month. Different local authorities offer different ways for you to pay – you can see which options yours offer by entering your postcode here


Many allow you to pay online with a credit or debit card, and you can sometimes pay over the telephone, in person, by cheque, BACS, standing order or even using Paypoint too – check with your local council.

Missing a payment

It’s really important to always try and pay your council tax on time. If you miss an instalment, your local authority will issue you with a reminder, asking for payment within seven days. If you don’t pay within this time, a full year’s council tax then becomes payable, leaving you with a much bigger bill.

If you don’t pay this, your local authority can ask the magistrate to issue a liability order to make arrangements for the arrears to be paid by deductions from your Employment and Support Allowance, Income Support, Jobseeker’s Allowance or your wages. They can also ask for bailiffs to seize your goods to the value of the amount that you owe and in very drastic circumstances you could be sent to prison.

If you are in arrears or struggling to make your payments, speak to your local council as soon as you can and explain your situation to them.


It’s really important to always include this payment in your monthly budget as it’s considered a priority bill – meaning there are repercussions if you don’t pay it. If you need help budgeting, a thinkmoney account can help. We set aside the money you need for regular bills, such as your council tax, when you’re paid, so you should never miss a payment.