Council tax: How does it work in London, how much do I owe and what does it fund?

Whether you’re a homeowner or private renter living in London, chances are council tax is one of your regular monthly outgoings.

From keeping the streets clean to collecting your bins and recycling and running leisure centres, just what is the charge and how does it work?

And as of today (Wednesday, January 18) mayor Sadiq Khan has confirmed charges will be increasing in the capital from April 2023.

Luckily LondonWorld has broken down everything you need to know about council tax in this handy explainer.

What is council tax?

Council tax is a fee you pay to your local council for the services they run in your area.

The UK is broken down into county councils, borough (smaller area sized) councils and town or parish councils. However, if you live in London, you only need to worry about one council area - the borough you live in.

You can check your local council or London borough here.

What is my council tax spent on?

Councils and boroughs fund services with your money, and also receive funds from central government.

Some of the things your tax pays for include street cleaning, maintaining local parks, running the fire service, and supporting the police force.

If you’re lucky, your local area may also spend money on things like swimming pools, libraries and classes.

How much council tax do I need to pay?

The amount you owe is based on the value of your property (owned or rented) and the number of people who live there. It’s divided into bands ranging from A - H, with A being the lowest band. Great, so how do I work it out?

So this is where it can get complicated. In order to work out your council tax, the gov.uk website says you need to know the valuation band for your home, how much your council charges for that band and whether you can get a discount or exemption from the full bill.

However, usually, if you enter your postcode on the council tax section of your local council website, they can calculate the amount for you and you can arrange to pay the bill.

But, if you think they’ve got it wrong - or that you should be getting a discount - you can challenge this. Be careful though, as it can go up as well as down!

How does this all break down?

For example, in the London Borough of Southwark, these are the current council tax bands - but remember this will vary across all other councils.

• Band A: a property worth up to £40,000 as of April 1991;
• Band B: worth £40,001 - £52,000;
• Band C: worth £52,001 - £68,000;
• Band D: worth £68,001 - £88,000;
• Band E: worth £88,001 - £120,000;
• Band F: worth £120,001 - £160,000;
• Band G: worth £160,001 - £320,000;
• And Band H: worth over £320,000.

This means, in an average Band D property in Southwark, an annual council tax bill was a total of £1,594.54 from April 2022/23.

Of that, £1057.28 went to Southwark (to empty bins and collect recycling etc) and £395.59 was given to the Greater London Authority (GLA) - aka the mayor Sadiq Khan.

That doesn’t mean he got to spend it - it funded services which operate London-wide that the mayor and the GLA are responsible for, such as TfL, the fire service and the Met Police.

Finally an additional £141.67 went to Southwark Council, as a social care precept.

Like the mayor’s money, that’s an additional sum your local council charges and specifically must be spent on funding adult social services. The government introduced the social care precept in 2016.

Brent Council defines adult social care as “practical support to people with a disability, physical or mental illness to live independently and stay safe and well… usually provided in people’s homes, care homes or in the community”.

How do I pay my council tax?

Your council, once you sign up online, should send you a bill. This tells you how much you need to pay for the year, and how this has been worked out.

The government says the cost is usually split into 10 monthly payments.

However, if you’re having trouble paying, get in touch with your council. They can help you by spreading payments over 12 months instead, or help you with discounts or debt advice.

You can usually pay your tax online, or by a direct debit. You can also use ‘Paypoint’, ‘Payzone’ or ‘Quickcards’ for cash payments at post offices, banks, newsagents and shops.

Can I get a discount or exemption?

Firstly, you may be able to get council tax reduction (this used to be called council tax benefit) if you’re on a low income or get benefits.

You can challenge your council tax band if you think your home has been valued wrong.

Also, If you are living alone in your property you are able to claim a 25% discount on your council tax bill. This is known as the single person’s discount.

It also applies if you live with people but none of them are eligible to pay council tax. For example, if all your housemates are full-time students, or are under 18.

Second home or holiday home owners must pay council tax on those properties, but some councils offer discounts - which is often controversial.

Finally, there are also ‘disabled band reduction schemes’ which can reduce bills for people living in homes specially adapted to support a disabled person.

For more information on all of these and any other schemes, contact your local council.