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Welsh Government’s council tax reform plans welcomed

07 Dec 2022 3 minute read
House for Sale

Welsh Government proposals to reform council tax have been welcomed by the Chartered Institute of Taxation (CIOT).

The reforms would add more council tax bands to the top and bottom of the scale to align the tax more closely to property values and the bands would be evaluated more frequently.

Improvements to the framework of discounts, disregarded persons exemptions and the design of the Council Tax Reduction Scheme which provides support to low-income households are also under consideration.

Council tax bands in Wales are still based on house values from 19 years ago in April 2003, well before the dramatic rise in house prices across the UK and the increase in the population of Wales, while rates in England and Scotland are based on values from 31 years ago in 1991.

This has led to concerns about whether it is fit for purpose and fair, as the amount of council tax charged for a house in band I (the highest council tax band in Wales) is currently three and a half times as much as a house in the lowest band (band A) whereas a home in the top band could be worth at least nine times as much.

Welsh Government has the power to make these changes without Westminster approval.


Responding to a Welsh Government consultation on the reforms which would revalue all 1.5 million properties, and schedule more frequent valuations in the future, Ritchie Tout, Vice-Chair of CIOT’s Welsh Technical Committee, said: “If the principle behind the reform is that bills are proportional to house values, then the suggestions from the Welsh Government get closer to that.

“The Welsh Government would like a new system that helps to reduce wealth inequalities, considering criticism that the council tax system does not reflect current property values and appears to treat taxpayers unequally.

“It is likely that five-yearly and possibly even more frequent revaluations in Wales will help achieve the Welsh Government’s goal of a fairer and more progressive tax system. And adding more bands covering the entire property value scale and re-evaluating the bands to align them more closely to property values could help, albeit with some added complexity as the trade-off.

“The transition to a new council tax system must take account of the circumstances of taxpayers’ lives in low-income or low-wealth households to achieve equity in the system and maintain public support. Effective communication by the Welsh Government to the public is key.

“There is a case for considering the merits and disadvantages of a targeted council tax deferral scheme for owner-occupiers to address hardship for those who are property-rich, income poor where other measures do not provide enough relief.

“In terms of potential improvements to the framework of discounts, disregarded persons and exemptions, the existing system is very complex.

“This makes it difficult for people to understand and therefore access relevant support. It also makes it difficult to write guidance and for staff to administer. It is therefore a good opportunity to relook at the whole council tax system in Wales so that people who are entitled to pay lower council tax do not have to subsequently claim support.”

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