Who Pays Council Tax Landlord or Tenant? | A Clear Guide

Council Tax plays a significant role in funding essential services such as waste collection, local education, and infrastructure development in the UK.

However, one recurring question for landlords and tenants is: who is responsible for paying Council Tax? The answer depends on various factors, including the type of tenancy agreement, the property’s use, and the local council’s rules.

In this guide, I’ll explain everything you need to know about Council Tax responsibilities, including common scenarios, legal obligations, exemptions, and practical tips for managing disputes.

What Is Council Tax?

Council Tax is a recurring charge levied on residential properties across England, Scotland, and Wales. Its purpose is to fund local government services such as:

• Policing and fire services.
• Waste collection and recycling.
• Libraries, parks, and leisure facilities.
• Local road and public transportation maintenance.

Each property falls into one of several valuation bands, determined by its market value in April 1991 (in England and Scotland). These bands, ranging from A to H, dictate the amount payable. Local councils set the rates annually, and charges may vary by region.

The General Rule of Liability

Responsibility for paying Council Tax usually rests with the person who occupies the property. This means tenants are typically liable when renting. However, there are exceptions, especially when properties are empty or classified under specific categories, such as Houses in Multiple Occupation (HMOs).

Council Tax Hierarchy Explained

The law outlines a hierarchy for determining who must pay Council Tax. This hierarchy is as follows:

1. Resident Freeholder: Typically the homeowner living in the property.
2. Resident Leaseholder: Someone leasing the property and living in it.
3. Tenant: A person renting and occupying the property.
4. Licensee: Someone with permission to live in the property without a formal tenancy agreement.
5. Owner: If the property is unoccupied, the owner is liable.

This legal structure ensures clarity in determining responsibility when disputes arise.

Who Pays Council Tax Landlord or Tenant in Most of the Case?

In most cases, tenants are responsible for paying Council Tax if they occupy the property. This is the default rule under UK law, where the person living in the property is liable for the payment. However, there are notable exceptions based on the property type, tenancy agreement, and specific circumstances:

When Tenants Pay Council Tax (Most Common Scenario)?

1. Standard Tenancy Agreements

• • If the tenant rents the entire property, they are usually responsible for Council Tax.
  • This responsibility is often explicitly outlined in the tenancy agreement.

2. Non-HMO Shared Housing

• • If multiple tenants share a property and sign a joint tenancy agreement, they are collectively liable for Council Tax.

3. Private Tenancies

• • Private tenants in long-term leases generally handle Council Tax payments independently.

When Landlords Pay Council Tax?

Landlords are liable in specific scenarios, such as:

1. Houses in Multiple Occupation (HMO)

• • In HMOs, where tenants rent individual rooms and share common facilities, the landlord is responsible for Council Tax.
  • Landlords typically include the cost in the rent or pay it directly to the council.

2. Unoccupied Properties

• • If the property is empty, the landlord must pay Council Tax unless exemptions or discounts apply (e.g., for renovations or an unfurnished property).

3. Short-Term Lets

• • For holiday rentals or properties rented for short durations, landlords often cover Council Tax.

4. Student Housing

• • If all occupants are full-time students, the property is exempt from Council Tax. Landlords may need to apply for the exemption and manage this aspect themselves.

Exceptions and Special Cases

Council Tax Exemptions for Landlords and Tenants

Certain scenarios qualify for exemptions or significant reductions:

• Student Occupancy: Entirely student-occupied properties are exempt.
• Armed Forces Accommodation: Properties used by military personnel are exempt.
• Properties Undergoing Repairs: Structural repairs may qualify for a temporary exemption.

Council Tax Discounts

• Single Occupant: A 25% discount is available for properties occupied by only one adult.
• Disabled Reduction: Discounts apply if the property has been adapted for someone with disabilities.
• Empty Properties: Discounts vary but may reduce the landlord’s liability significantly during vacancy periods.

When Landlords Agree to Pay for Tenants

Some tenancy agreements include Council Tax as part of the rent. This is common for:

• Fully furnished and serviced rentals.
• Short-term lets where tenants do not handle utilities.
• Cases where tenants are students or first-time renters who prefer a simplified billing process.

Council Tax Procedures for Moving In and Out

Tenant Moving In: Notification Process

When a new tenant moves into a property, they must inform the local council immediately. This ensures accurate billing from the start of their occupancy. Councils usually require:

• The tenant’s full name and contact details.
• The move-in date.
• Details of other occupants.

Calculating Tax During Tenancy Transitions

Landlords should notify the council whenever a tenant vacates the property. Councils will adjust the liability to ensure landlords are not overcharged for vacant periods.

Final Payments When Moving Out

Tenants must ensure any outstanding Council Tax is paid before leaving. Landlords should confirm this to avoid being held responsible for unpaid balances.

Are Any Council Tax Discounts Available?

Yes, there are several Council Tax discounts available, primarily based on the number of adult occupants in the property. Importantly, not all adults are counted towards the total due to a category called ‘disregarded people.’ These individuals, while technically adults, are excluded when calculating the number of residents for Council Tax purposes. If a property has fewer than two countable adults, discounts can apply.

Who Is Considered a Disregarded Person for Council Tax?

According to entitledto.co.uk, the following individuals qualify as “disregarded people”:

1.Age-Based Disregards

1. • Anyone aged 17 or under.
   • School or college leavers under 20 (disregarded until 1 November after leaving school or college).
   • Individuals aged 18, if someone is entitled to child benefit for them.

2. Students and Related Groups

1. • Full-time students enrolled in a qualifying course of education.
   • Spouses or dependents of students who are non-British citizens restricted by immigration rules from working or claiming benefits.

3. Medical and Care Disregards

1. • Severely mentally impaired individuals.
   • Hospital patients living in a hospital.
   • Residents of care homes, nursing homes, or mental nursing homes receiving care or treatment.
   • Individuals in a hostel providing care for old age, physical or mental disability, drug or alcohol dependency, or mental illness.

4. Work and Training-Related Disregards

1. • Apprentices and individuals on government training schemes.
   • Foreign language assistants on approved exchange programmes.

5. Carers and Care Workers

1. • Care workers working on low pay (meeting specific criteria).
   • Carers providing at least 35 hours of care per week to someone who is not their spouse, partner, or child under 18.

6. Special Residence Groups

1. • Members of religious communities (e.g., monks, nuns).
   • Members of visiting armed forces and their dependents.
   • Prisoners (including those detained under mental health legislation or prior to deportation).

7. Other Temporary or Special Circumstances:

1. • People living in the property temporarily who have a home elsewhere.
   • People staying in hostels or night shelters (e.g., Salvation Army or Church Army hostels).

Discounts Available Based on Disregarded People

1. Single Person Discount (25%)

1. • If only one countable adult lives in the property, they are entitled to a 25% discount. Disregarded people do not count towards the total. For example:
     • One adult and one full-time student → eligible for a 25% discount.

2. Empty Property Discounts

1. • Some councils offer discounts for unoccupied properties, particularly if unfurnished or undergoing renovations.

3. Severe Mental Impairment Exemption

1. • If everyone in the household is classified as severely mentally impaired, the property may be exempt from Council Tax.

4. Student Exemption

1. • Properties occupied solely by full-time students are fully exempt from Council Tax.

5. Carers Discount

1. • A discount applies if the carers meet specific eligibility criteria, such as living on the property to provide care for at least 35 hours a week.

6. Disability Reduction Scheme

1. • If the property has been adapted for someone with disabilities, such as adding a wheelchair ramp or an extra bathroom, a reduction may apply, effectively lowering the property’s valuation band.

How to Apply for Council Tax Discounts?

1. Contact Your Local Council

1. • Check your council’s website for eligibility requirements and application forms for discounts and exemptions.

2. Provide Evidence

1. • Be prepared to supply documentation, such as proof of full-time student status, medical certificates, or evidence of disability.

3. Regular Reviews

1. • Discounts and exemptions are subject to review, and councils may request updates to confirm eligibility.

Tips for Landlords and Tenants to Avoid Disputes

1. Include Clear Terms in Tenancy Agreements
   State explicitly who is responsible for Council Tax in the contract to avoid confusion.
2. Notify the Council Promptly
   Both landlords and tenants should inform the council of occupancy changes to ensure accurate billing.
3. Keep Payment Records
   Maintain receipts and correspondence with the council to resolve disputes effectively.
4. Understand Local Policies
   Check your council’s guidelines for discounts, exemptions, and billing adjustments.

How Council Tax Is Calculated in the UK

Council Tax is calculated based on three key factors: the property’s valuation band, the local council’s tax rates, and any discounts or exemptions that may apply. Here’s a step-by-step breakdown of how it works:

1. Determining the Valuation Band

Each residential property in the UK is assigned a valuation band based on its market value as of April 1, 1991 (in England and Scotland). The bands are categorized as follows:

Band	England & Scotland Property Value	Wales Property Value
A	Up to £40,000	Up to £44,000
B	£40,001 to £52,000	£44,001 to £65,000
C	£52,001 to £68,000	£65,001 to £91,000
D	£68,001 to £88,000	£91,001 to £123,000
E	£88,001 to £120,000	£123,001 to £162,000
F	£120,001 to £160,000	£162,001 to £223,000
G	£160,001 to £320,000	£223,001 to £324,000
H	Over £320,000	Over £324,000

Local councils use these bands to determine how much Council Tax is due for a property.

2. Applying the Local Council’s Tax Rates

Each local council sets its own Council Tax rates, which vary by location and band. The Band D rate acts as a baseline, with other bands calculated proportionally:

Band	Proportion of Band D
A	6/9 (or 67%)
B	7/9 (or 78%)
C	8/9 (or 89%)
D	9/9 (or 100%)
E	11/9 (or 122%)
F	13/9 (or 144%)
G	15/9 (or 167%)
H	18/9 (or 200%)

For example, if the Band D rate in your area is £1,800 per year, a Band A property would owe £1,200 (67% of Band D), while a Band H property would owe £3,600 (200% of Band D).

3. Considering Discounts and Exemptions

Certain circumstances can reduce the amount payable:

Discounts

• Single Person Discount: If only one adult lives in the property, a 25% discount applies.
• Second Homes: Some councils offer reduced rates for second homes.
• Empty Properties: Unoccupied properties may qualify for discounts, typically for short periods.

Exemptions

Properties may be fully exempt from Council Tax in cases such as:

• Occupied solely by full-time students.
• Used exclusively by members of the armed forces.
• Undergoing significant structural repairs.
• Unoccupied due to the death of the previous occupant (exemption applies for up to six months).

4. Adjusting for Billing Periods

Council Tax is typically billed annually but can be divided into monthly payments (usually 10 or 12 installments). If you move in or out mid-year, the tax is prorated based on the duration of occupancy.

Example Calculation

• Property Band: C
• Local Council Band D Rate: £2,000/year
• Band C Rate: 89% of Band D = £1,780/year
• Discount Applied: Single Person Discount (25%) = £1,780 × 0.75 = £1,335/year

If the occupant moved in on July 1st, they’d only owe for six months:

• £1,335 ÷ 12 × 6 = £667.50

5. How to Check and Pay Council Tax

• Use your local council’s website to determine your property’s band and tax rate.
• Set up a direct debit or pay manually using online portals, phone services, or at post offices.

Conclusion

The responsibility for Council Tax depends on the occupancy, tenancy type, and agreements between landlords and tenants. By clarifying obligations in contracts and understanding local council policies, both parties can avoid disputes and manage payments smoothly.

FAQs About Council Tax Responsibility

Who Pays Council Tax in a Shared House?

In HMOs, the landlord typically pays Council Tax. In non-HMOs, tenants sharing a lease are jointly responsible.

Can Landlords Pay Council Tax for Tenants?

Yes, landlords can pay Council Tax on behalf of tenants, especially in serviced or short-term rentals.

Do Landlords Pay Council Tax for Students?

If all occupants are full-time students, landlords can apply for a full exemption.

What Happens If No One Pays Council Tax?

Councils will pursue unpaid bills, potentially leading to court actions, fines, or property seizure.

How Is Council Tax Liability Decided?

Liability is determined by the occupancy hierarchy and specific tenancy agreement terms.

What If a Tenant Moves Out Without Paying Council Tax?

Landlords may be pursued for unpaid Council Tax if tenants leave without settling bills.

Are There Penalties for Unpaid Council Tax?

Yes, penalties can include fines, legal actions, and enforcement measures like wage garnishments.