Council Tax – Who Pays?

Tuesday March 19th, 2013

Most landlords who let a property that is tenanted will not be liable for council tax. This is because where a property is occupied by a tenant; it’s the tenants who are responsible for meeting the costs of the council tax charge.

However, when a property is vacant many landlords will have to prove this by way of a tenancy agreement and if the property is furnished or unfurnished, by way of an inventory or check out report. Many councils now demand this before they will grant exemptions.

If the property is furnished, the landlord will only enjoy 10% relief on the council tax due, proportionate to the time it is vacant.

Valuation bands

All home are given a council tax valuation band by the Valuation Office Agency (VOA). The band is based on the value of your home on 1 April 1991. A different amount of council tax is charged on each band. Each local authority keeps a list of all the domestic property in its area, together with its valuation band. This is called the valuation list.

The valuation bands are:

Valuation band	Range of values
A	Up to £40,000
B	Over £40,000 and up to £52,000
C	Over £52,000 and up to £68,000
D	Over £68,000 and up to £88,000
E	Over £88,000 and up to £120,000
F	Over £120,000 and up to £160,000
G	Over £160,000 and up to £320,000
H	Over £320,000

Properties exempt from council tax

Some property is exempt from council tax altogether. It may be exempt for only a short period, for example, six months, or indefinitely.

Properties which may be exempt include:

• property which is empty. This means it has to be unoccupied. The property also has to be substantially unfurnished. The exemption applies for a maximum of six months and the property has to be vacant for the whole of this period (although up to six weeks of occupation during the period is allowed)
• property which is vacant because it needs major repairs or alterations to make it habitable. The exemption applies for a maximum of 12 months whether the work is actually finished or not by then
• condemned property
• property which has been legally re-possessed by a mortgage lender
• property unoccupied because the person who lived there now lives elsewhere because they need to be cared for, for example, in hospital, in a care home or with relatives
• property which is unoccupied because the person who lived there has gone to care for someone else
• any property that only students or Foreign Language Assistants on the official British Council programme live in. This may be a hall of residence, or a house. If the property is occupied by both students and non-students the property is not exempt but any students in the house are disregarded
• a caravan or boat which is used as a main residence but which is unoccupied. This exemption lasts for up to six months. A holiday caravan or boat is exempt if it’s on a property where council tax is paid
• a property where all the people who live in it are aged under 18
• property which is occupied only by people with severe mental impairment
• a self-contained ‘granny flat’ where the person who lives in it is a dependent relative of the owner of the main property.

Who has to pay council tax

Usually one person, called the liable person, is liable to pay council tax. Nobody under the age of 18 can be a liable person. Couples living together will both be jointly and severally liable, even if there is only one name on the bill. This applies whether the couple is married, cohabiting or in a civil partnership. No one is under an obligation to make a payment until they are issued with a bill in their name or, if they are jointly and severally liable, with a joint taxpayers’ notice.

Usually, the person living in a property will be the liable person, but sometimes it will be the owner of the property who will be liable to pay.

The owner will be liable if:

• the property is in multiple occupation, for example, a house shared by a number of different households who all pay rent separately; or
• the people who live in the property are all under the age of 18; or
• the property is accommodation for asylum seekers; or
• the people who are staying in the property are there temporarily and have their main homes somewhere else; or
• the property is a care home, hospital, hostel or women’s refuge.

If only one person lives in a property they will be the liable person. If more than one person lives there, a system called the hierarchy of liability is used to work out who is the liable person. The person at the top, or nearest to the top, of the hierarchy is the liable person. Two people at the same point of the hierarchy will both be liable.

The hierarchy of liability is:

1. a resident owner-occupier who owns either the leasehold or freehold of all or part of the property
2. a resident tenant
3. a resident who lives in the property and who is a licensee. This means that they are not a tenant, but have permission to stay there
4. any resident living in the property, for example, a squatter
5. an owner of the property where no one is resident.

Tenancy changeovers

Clearly if your property(s) are managed by DeMachin Ltd, we take care ensuring the right people pay their share. If you are a landlord managing the property yourself, these are the steps we would advise to ensure that you don’t get a letter demanding arrears months or even years down the line.

Contact the relevant council to notify them of a tenancy changeover

All the bills need to be addressed to the landlord and sent to your address NOT the property in question.

If demands are sent to the property, they will lay there unopened until you receive a summons for the amount owed.

As time passes, it will be more and more difficult to prove liability. You will have to prove any one, if not all of the following:

1. Tenancy agreement
2. Proof of where the tenancy deposit was lodged with a deposit scheme
3. Inventory reports proving furnished/unfurnished status
4. Proof of home address

There may be a cross over in liability from the previous tenant to you and this is difficult to prove if they are on a periodic contract or extend their contract by a few weeks. They may be covered by the tenancy agreement but this is why you may be asked for proof of check out reports and security deposits. This information gets archived and mislaid over time and the last thing you want to do is be hauling through boxes of information trying and hoping to find what you need.

Rule of thumb is back up all conversations with the council with a letter summarising actions, dates and which customer advisor you spoke with. Follow this up with a demand for a final bill, which states a zero balance. This is watertight way of ensuring that you never get a nasty shock 6 months down the line.

We see this all the time with all utilities so if you invest a little time now, you will not have spend a lot of time later. Here is an example of what should be in your written correspondence:

Name(s) of outgoing tenants(s): Mr Tenant

Move out Date 01 March 2011

Name(s) of incoming tenants(s): Miss New Tenant

Move in Date 03 March 2011

Logged with your office on, 04/03/2011 with Miss Customer Advisor

Property Status: Unfurnished – exempt

Please forward all correspondence relating to the homeowner/landlord to the following address:

If you need any advice or help, please contact DeMachin Ltd 020 7607 1712 or email at [email protected].