Welsh Government launches Phase 1 consultation on council tax reform in Wales

The Welsh Government published a Phase 1 consultation on council tax reform in Wales on 12 July 2022, seeking views on what it calls an ambitious package of reforms¹. Responses are due by midnight on Monday 4 October 2022, by online form, email or post to the Local Government Finance Reform Division in Cardiff¹. A Phase 2 consultation is planned for 2023 and will outline any changes in more detail¹.

The consultation covers completing a revaluation of all 1.5 million properties in Wales, creating new bands and tax rates, introducing rolling revaluation cycles, improving the framework of discounts, disregarded persons, exemptions and premiums, and improving the Council Tax Reduction Scheme¹. It also asks for views on the use of information, the appeals framework and other administrative aspects of the system¹. The document states that the current bands are based on property values on 1 April 2003, the last time the council tax base was updated in Wales, and that each property sits in one of nine bands, A to I¹. It sets out an intention to implement an updated property list with effect from 1 April 2025, based on valuations from 1 April 2023¹.

The Welsh Government says the system places a higher tax burden on households with lower levels of wealth and that the bands are nearly twenty years out of date¹. It cites a survey in which 50% of respondents reported knowing very little or nothing at all about council tax, and 57% disagreed with the statement that the council tax system is fair¹. It also says the amount charged for band I properties is currently three and a half times as much as band A, yet homes in the top band could be worth at least nine times as much as those in the bottom band¹. Its latest report suggests house prices across Wales had increased by 150% between 2003 and 2022¹. It estimates that around half of properties would move bands under revaluation, with 26% moving up and 26% moving down, and nearly half staying in the same band¹.

On the current system, the document says council tax makes up around a fifth of total council spending, and that taxpayers collectively provide over £2 billion a year towards the £10 billion cost of local services in Wales¹. It says half of households in Wales receive some form of discount or reduction, and that nearly half (48%) receive some form of support¹. It records that the council tax system was first introduced in Wales, England and Scotland on 1 April 1993, that Band I was added for the highest value properties with effect from 1 April 2005, and that the Council Tax Reduction Scheme replaced Council Tax Benefit in Wales on 1 April 2013, after the Welfare Reform Act 2012 abolished Council Tax Benefit on 31 March 2013¹. It also notes that the maximum premium permitted by councils will be 300% from 1 April 2023, and that there are currently 58,000 flags on the Welsh council tax list out of 1.5 million properties¹.

The document gives the following figures for average band D council tax and the range across Wales¹:

Why it matters for households

Council tax is a bill paid by households in around 1.5 million domestic dwellings in Wales, and the consultation covers the structure of that bill rather than its current level¹. The proposals under discussion include revaluing every property, which the document says would update everyone's tax band and could be accompanied by a new set of bands and rates, including possible additions at the top and bottom of the scale¹. The Welsh Government states that a property rising in value over the last twenty years would not necessarily mean a higher council tax bill, because a revaluation would update all bands together¹. Its estimate that around half of properties would move bands, split evenly between moving up and moving down, indicates the scale of potential change for individual households¹. The consultation also covers the discounts, exemptions and premiums that determine what many households actually pay, and the Council Tax Reduction Scheme that supports low-income households, which the document says reaches nearly half of households in Wales in some form¹. The Welsh Government states that reforms of this kind will happen over the longer term and are not an immediate solution to the cost-of-living crisis¹.

What happens next

Responses to the Phase 1 consultation are due by midnight on Monday 4 October 2022¹. A Phase 2 consultation is planned for 2023 and will outline any changes in more detail¹. The document sets out an intention to implement an updated property list with effect from 1 April 2025, based on valuations from 1 April 2023¹. The maximum premium permitted by councils will be 300% from 1 April 2023¹.