Council Tax No 7 - Single Person Relief (SPR) No 2 Discount Disregards

SPR applies to one adult residing in a dwelling. In council tax law you might ask the question: "When are more than one person equal to one person?" It is an odd question with many answers - say over 20!

The following examples of "discount disregards"are not counted when assessing occupation for SPR:

• a minor (under 18 years);
• an adult whose main residence is not the dwelling - this has been the subject of case law;
• several kinds of student, eg college or university students living at home or in digs (ie the CT payers home);
• certain trainees, such as student nurses or apprentices;
• certain non-permanent residents, eg guests staying with the taxpayer when they are on holiday;
• hospital patients and those in care, eg in care homes.

Jaefoo-Environmental-Taxation: Landfill Tax - Waste from Contaminated Land -End o...

Jaefoo-Environmental-Taxation: Landfill Tax - Waste from Contaminated Land -End o...: The date - 31 March 2012 - is creeping closer. It is the day for the end of the exemption from landfill tax for waste from registered con...

Council Tax No 6 - Single Person Relief (SPR) No1

The Local Government Finance Act 1992 provides as a general rule that when two (or more) adult persons occupy a dwlling the result will be that the council tax payer pays the full amout of tax for the dwelling's council tax band.

When only one adult person occupies the dwelling relief is given by a 25 percent reduction ( a discount) in the amount of council tax to be paid. This may result from::

• being a one person household;
• other residents have left to reside elsewhere;
• a spouse has died;
• a marriage has ended and one peson leaves the dwelling;
• one spouse is away working elsewhere.

In most cases the individual remaining must claim the SPR. However, where a spouse dies the Registrar of Births Deaths and Marriages notifies the charging authority. The charging authority then makes the council tax adjustments to reflect the SPR.
[Note: A family's children, ie minors (under 18 years), and most students are not treated as residing in the dwelling for council tax purposes.]

The law of council tax is more complicate than I have described above. For instance case law has established that a person required to live eslewhere may be regareded as resident so the SRP is lost!

Council Tax No 5 Consultation on Residential Reliefs

The government is consulting on reform of "technical" aspects of council tax - see

http://www.communities.gov.uk/documents/localgovernment/pdf/20192051.pdf

Will follow-up this post with more details. Brief reading suggests that some of those with vacant dwellings will be subject to more council tax!

Jaefoo-Blog - Local Taxation: Local Taxation - Working at Home 2 - Part of Dwell...

Jaefoo-Blog - Local Taxation: Local Taxation - Working at Home 2 - Part of Dwell...: This post follows No1 on this Blog. If you are starting a new business or you are joining the growing horde of employees who work from hom...

Local Taxation - Working at Home 2 - Part of Dwelling Exclusive for Business or Not...?

This post follows No1 on this Blog.

If you are starting a new business or you are joining the growing horde of employees who work from home you may find yourself with demand for business rates which is in addition to your council tax demand!

There are a number of pointers which indicate whether part of a dwelling would become liable for assessment for business rates. The following pointers are offered:

1. if from time to time work is carried out on say, the kitchen table or in some other family-used place it should not attract an assessment for business rates;
2. similarly, if the work is essentially carried out at a desk used for the purpose in say, a reception room or bedroom and the room is used as part of the home by other members of the household, it should not attract an assessment for business rates; 
3. On the other hand, be warned, if a room, garden room, garage, shed or other accommodation is set aside and exclusively used for work purposes, it is possible that the question of an assessment for business rates will arise.

The main issues underpinning the last pointer are: 1) the degree of exclusivity of use in part of the dwelling, and  2) the nature of the work. For instance, use of the room by other members may exist from time to time but it may be insignificant. Although exemptions and reliefs from business rates are ignored in this series on Working at Home, where an exemption etc from business rates is available it may affect the outcome.

Local Taxation - Working from Home No 1 - Council Tax, Business Rates or Both

An intention to start working from a family home will involve a review of the impact of local taxation on the family budget and business budget. Briefly the points to note are as follows:

1. A dwelling which is used exclusively for residential purposes will normally result in the occupier paying council tax.
2. A dwelling which is used partly but minimally for business purposes would normally result in the occupier paying only council tax. (The issue to be considered is the extent and degree of business use.)
3. A dwelling which is used partly but significantly for business purposes would normally result in the occupier paying council tax and business rates. (The same issue of the extent and degree of business use needs to be considered.) 

The next two posts of  this series on Working at Home will examine the range of possibilities under 2 and 3 above. (Please note: In these posts the issue of the availability of exemptions and reliefs from local taxes is ignored.)


Finally, in local taxation law and practice for council tax and business rates  property may be known as a composite property. It will be a property which part residential and part business, eg a shop with  flat above, and an office premises incorporating a flat. Our three posts will deal with dwellings - houses and flats - at least initially.

Local Taxation - What is It?

Historically practitioners tend to think of "local taxation" as the following:

• rating; and,
• council tax.

A study of the history of local taxation would probably cover rating since the Poor Relief Acts of the 16th Century. (In fact it went back a  bit further in time.) Rating covered business and residential property until the community charge was introduced and suffered a swift demise; being replaced by council tax under the Local Government Finance Act 1988.

A classification of "taxes" today pobably extends beyond council tax and rating so I tend to think of a "local tax" as being any taxation or revenue device or measure where local folk can properly and lawfully dip their hands in or have to use their hands to fork out (or not) their money from their pocket or handbag.

What on earth does he (I) mean? Just that for my purposes I find it useful to think of local taxation as including the following:

• council tax;
• rating* and its "measures", eg BIDs and rating supplements(1);
• community infrastructure levy (CIL);
• various development tariffs (many of these are likely to be absorbed into CIL);
• section 106 Agrements (and the like) (but these are likely to go was CIL develops more fully);
• local authority revenues covering fees, charges, etc, ie for parking, market stalls, trading licences and the like:
• aspects of national taxation which has a direct local feature, eg the Landfill Community Fund, the Aggregates Levy Sustainability Fund.

*Rating as it is now is largely a national tax but the Localism Bill may change the balance in favour of it becoming a local tax.

Business Rates No 1 - Supplement

Although little used (so far at least) the business rates supplement (BRS) is a local tax add-on which in our straightened circumstances could possibly become popular with some higher tier local authorities.

BRS is a local tax which must be used for economic development purposes. It may be imposed under the Business Rates Supplements Act 2009 (subject to power of rejection (s 24) by the appropriate national authority). (See http://www.legislation.gov.uk/ukpga/2009/7/section/11 )

BRS is imposed on non-exempt no-domestic properties, ie those with rateable values (RVs) over £50,000. Exemptions (s 11(3)) and relief (s 15) apply under the 2009 Act to the BRS and there is provision (s 16 and sch 2) for an interaction with any levy under a Business Improvement District scheme (BID).

The one example (in London) is the Greater London Authority's BRS of 2p which contributes funds for Crossrail.   It is imposed on non-domestic properties with rateable values over £55,000 - as shown in the valuation list of April 2010. (See  http://www.london.gov.uk/crossrail-brs )

If BRS does take-off in a big way a change in the ratepayers' "say" is on the cards. At present ratepayers are able to vote on the proposals for a supplement if their a contribution will be greater than a third of the cost: this is about to change if the Localism Bill (cl 38) goes through. In future all proposals will require the consent of the majority of the ratepayers.

Council Tax 4 - Consultation - How it Works...?

Annex A of the document "Localising support for Council Tax inEngland: Consultation" (2 August 2011) describes how council tax (CT) works. It is seemingly accurate as far as it goes but what is not stated is how the valuation side of the CT business works. In short, it is moribund!

Council tax valuations (and the concomitant CT Bands) are stuck in a time warp of the early 1990s. At that time it was not common to see a dwelling worth more than say, £1 million: now they are 10 a penny!  What's more the distribution of values has vastly changed in spread and "enormity".

One imagines that Band A dwellings stand almost cheek by jowl with houses and flats worth £5m, £10m, ... £40m... etc,... etc. Because of time-value changes many will no longer reflect the extant relativities of the current banding system. The result is that "localism" is already unfair in this respect. 

As a result there are two priorities for the government:

1. revalue the 22 million dwellings in England; and,
2. review and reset the relativities of the CT Bands so that Band H is split into 10 or 20 more Bands which will more truly reflect the relative relationships in the pattern of modern capital values rather than those of about 30 years ago!

Incidentally, to be clear and fair, the total amount of council tax collected need not change as a result of the adoption of the above. The proposals merely extend the degree of fairness in the relativities already reflected in Bands A to G. The "hidden" benefits of the current system far outweigh CTBs.

http://www.communities.gov.uk/documents/localgovernment/pdf/19510253.pdf

Council Tax 3 - As a Mansion Tax...?

Council Tax Unfair:  Council tax is already unfair to those in the lower bands or in Band H with a house worth upto say, £2 million or so.When the so-called "mansion tax" was first mooted I was confused because it sounded like "council tax" without the need for a full revaluation - I assumed that an annual lump sum on would be paid on top of whatever was to be paid with the council tax, ie by those with a house worth £1 or £2 million or more.  

Of course those with houses in the lower part of Band H would have to be sorted out. The real issue is whether we really want fairness in local taxation or not. 

The low Band H owners or occupiers can be sorted out quite easily but do we want to do so????

Policy Statement:  I reckoned mansion tax would be a weak attempt at improving the progressive nature of council tax at the highest band. However, without seeing detailed policy statement on the mechanics of mansion tax I reserve comment. 

Revaluation:  To introduce mansion tax, I understand, it has been suggested that a revaluation would be needed. Really, perhaps it could be done a different way...? 

Thus,  the Valuation Office Agency (VOA) need not revalue all dwellings but allow self-assessment by those with houses or flats in Band H (or Band I in Wales).  (Self assessment is already used extensively in national taxation, eg in inheritance tax (IHT).)

Thus, at a certain date owners and/or occupiers of dwellings in Band H select an open market value  for their property in accord with the statutory definition. That is figure is recorded in the "valuation lists" ie one of several bands, ie in  "Bands for Top Values".

New Statute: A new statute would be needed to give effect to all this - including:

• several extra Bands of ascending band widths;
• a set of council tax (mansion tax) charging rates which are progressive and increasingly proportional to Band A
• An VAO challenge system to counter mistakes of valuation, ie self assessments of capital values;
• if the property is subsequently sold at a higher figure, that figure will be used to correlate, eg allowing for inflation, the "correctness" of the self assessment.

No doubt other factors could be built in, eg help in cases of hardship:   but the intention is to increase fairness in the local taxation system.

Council Tax 2 - Jumping to Higher Band - Anomalies

There has not been a council tax "revaluation" for yoinks. So unless there is a council tax revaluation most houses and flats will retain their present banding for council tax hereafter. Also, even if the owner-occupier improves the property and this results in a capital value (at 1991 capital values) greater than the top figure of the present band, it will not normally result in more council tax being paid.

There is one exception to this rule. If the owner improves and sells later the new owner will find that the Valuation Office Agency (VOA) will want to establish the appropriate banding for the improved dwelling. If it moves to a highter banding more council tax becomes payable.

There may be exception to this rule! If a person buys a substantial vacant property already converted into say, five flats which are each at Band H (in England) Each is worth £1 million. He/she then converts the property into a single dweelling worth say £15 millions. The band remains at Band H.

The outcome is that the local authorities, police authority and fire and rescue services have all lost council tax from that property site. If it is made up, the other poorer (perhaps) council tax payers make up most of the difference - to maintain revenues.

Council Tax 1 - An Environmental Tax...? Playing in a Band

Council tax is assessed on the capital value of each dwelling and the dwelling is placed in a council tax band. The bands range from A to H in England and were, in effect, first set up in the early 1990's on values at 1st April 1991.

Each higher band above Band A is a proportionally higher - so that Band H (over £320,000) is 18 (where Band A is 6 (upto £40,000)). Thus, council tax is reasonably progressive from Band A to Band G. Thereafter, occupiers of a houses in Band H are all treated as being equally poor relative to the rest of the occupiers of the 2o million or so dwellings in the country.

Today, relative to one's wealth embedded in a dwelling, every owner-occupier is virtually treated in the same way as a multi-billionaire! One could do so much more for the environment if the bands for council tax ranged from Band A ..to...Band H... to...Band Z (dwellings with capital values of say, over say, £40,000,000.

Whether council tax is an "environmental tax" is, of course, a matter of definition. Capital values of houses and so on do or should reflect the quality of the local environment; so one might say "Yes, council tax is an environmental tax".

A report of an on-going saga concerns a house where a nearby new wind farm of eight 100m turbines has resulted in sounds of "Whooses" or "Wooms" and "Humming". It has been so intolerable that the occupiers moved out of their house and are now claiming damages. The report indicates that their home has become unmarketable as a family home. Also, a council tax reduction was warranted. It is the last point that is of interest in this post; it is not clear how the reduction came about.

Was it one of the following:

1. A reduction in value,resulting in a drop in the banding?
2. A council tax refunding or remission on the grounds of hardship?
3. A council tax "holiday" - again on the gounds of hardship?
4. A reduction under some other relief provision for council tax? or
5. An ex-gratia allowance or concession?