How is council tax calculated on new builds?

How is Council Tax calculated on new builds?

Council Tax is a tax that affects property owners in England, Wales, and Scotland. Any property that’s considered a dwelling (a self-contained accommodation that’s used as a home) is subject to this tax including new build properties. 

It is the job of the Valuations Office Agency (VOA) to determine the Council Tax on new build properties. 

The proceeds raised from Council Tax go towards community initiatives such as road works, street cleaning and waste collection. 

What factors are considered when determining the Council Tax on new build properties?

New build owners, and indeed all homeowners, are taxed in accordance with the size of their property (with Council Tax being readjusted if the home is extended), the value of their property and the location of their property. Based on these criteria, the Valuations Office Agency will sort new builds into a specific ‘band’.  

The amount that homeowners are taxed is based on what their property was worth on the 1st of April 1991, if they live in England or Scotland, or what their property was worth on the 1st of April 2003, if they live in Wales.

Doing this ensures that every homeowner is charged fairly and that their Council Tax isn’t affected by fluctuations in the housing market. 

If you’re interested in finding out how much your property would’ve been worth in either 1991 or 2003, the Money Saving Expert website, run by Martin Lewis, has a calculator that generates a rough estimate for you.

What are the Council Tax bands?

The Council Tax bands are organised alphabetically – ranging from Band A to Band H – with Band A being the lowest tax band and H being the highest. 

Dwellings are segmented as following: 

- Band A: 

Property valued at ≤£40,000

- Band B: 

Property valued between £40,001 and £52,000

- Band C: 

Property valued between £52,001 and £68,000

- Band D:

Property valued between £68,001 and £88,000

- Band E:

Property valued between £88,001 and £120,000

- Band F: 

Property valued between £120,001 and £160,000

- Band G:

Property valued between £160,001 and £320,000

- Band H 

Property valued at >£320,000

Why is my Council Tax band higher than my neighbours? - How to challenge your Council Tax band.

According to the VOA, there are three acceptable reasons to challenge your current Council Tax band:

1.) If your property’s structure has changed (i.e. demolished, converted into flats etc.).

2.) If your property isn’t being used for residential purposes anymore (i.e. it’s now an office).

3.) If the design of your local area has changed (i.e. a new supermarket etc.).

If any of these apply to you, or you no longer live at a property, or your home is no longer fit for purpose – it's worth getting in touch with the VOA to see if a more favourable Council Tax band is applicable or if you might even be exempt from paying Council Tax altogether. However, it’s vital to be able to show supporting evidence for your claims otherwise they will be dismissed.

When do you start paying Council Tax on a new build?

When you move into a new build, you need to register your property with the VOA as soon as possible and they will let you know which Council Tax band your property falls under. 

Council Tax can be legally charged from the date a property is occupied or from the date specified in the completion notice of the notice of the new build – a document that states when a new build is completed and officially becomes a dwelling. You can request a provisional banding from the VOA while you’re waiting for an official banding.