Council Tax reforms could see bands and the amount you pay change

Council tax helps to fund the everyday essential services provided by local councils, which we all rely on – from schools to local libraries, social care to street cleaning.

A key goal in making the system fairer is that the changes do not seek to increase the overall amount of council tax raised, and any redesign should raise the same amount of council tax across Wales as the current system would.

The current system is twenty years out of date, and it is unfair, with people living in homes in the lowest council tax bands paying a relatively higher amount of council tax in relation to the value of their homes, than people who live in higher value homes.

The consultation includes different potential approaches designed to make the tax fairer, including adding new council tax bands, changing the tax-rates charged for each band, and reviewing discounts and reductions.

The consultation also asks about the pace of change people would like to see. The earliest date for any changes coming into effect is 1 April 2025. However, changes could be deferred until the next Senedd term, or introduced in stages.

In parallel with this work, the Valuation Office Agency, is preparing to carry out a proposed revaluation of all 1.5 million homes in Wales to ensure valuations are up-to-date and in line with current property values.

Under Welsh Government plans, revaluations would happen every five years to ensure people are paying the right amount of council tax in relation to the value of their property. This also provides an opportunity every five years to keep looking at the tax bands and tax-rates, so we can keep making it fairer.

While property prices have generally increased, this does not mean that council tax bills will automatically rise. Many people’s bills would stay the same after reforms and some would fall.

The Welsh Government’s three proposed approaches are:

• Minimal reform – a revaluation of properties to check they are up-to-date but keeping the current 9 bands and tax-rates. This would bring the current system up-to-date and result in a small move in the direction of fairness.
• Modest reform – a revaluation plus further reforms to the tax-rates charged for each band, to spread council tax more fairly. This means bills for households in lower band properties would fall, and bills for those in the highest band properties would rise. This would address both the outdatedness of the current system and also its unfair, regressive nature.
• Expanded reform – a revaluation plus further reforms including additional tax bands and changes to the tax-rates. This approach would see the number of bands increase from 9 to 12, adding 1 band at the bottom for the lowest value properties in Wales, and 2 more bands at the top, for the most expensive properties valued at over £1.2 million. This would be a decisive move in the direction of fairness.

The Institute for Fiscal Studies has released an independent report today, providing illustrative examples for how the three approaches could look in different parts of Wales and for different types of households.

Nearly half of households in Wales currently receive a discount or reduction on their council tax bill, through the numerous discounts and exemptions, and our national Council Tax Reduction Scheme. This will not change because of this work.

Minister for Finance and Local Government, Rebecca Evans, said:

“We are asking people to help us shape the future of council tax in Wales. Achieving a fairer council tax will be one of the single most beneficial actions this government can take towards making Wales a more equal nation. The benefits will be felt in the pockets of many households.”

“This is not about raising more money from taxes and changes are not going to happen overnight. We see this very much as being a gradual process and that is why we are also asking for views on the pace of change.”

This work is being carried out in collaboration with Plaid Cymru, as a part of the Co-operation Agreement commitment between the Welsh Government and Plaid Cymru.

Plaid Cymru Designated Member Cefin Campbell said:

“It is widely recognised that council tax is outdated and long overdue for reform. This consultation is asking for the views of people across Wales on what a council tax could look like in the future and how we can make it fairer. While change is needed, it will take time meaning bills will not change immediately. We are consulting not only on what needs to change, but when the changes could come into place.”