Money: Council tax: up and up

Expect rises of around 8 per cent this April, writes Paul Gosling

COUNCIL TAX bills will typically go up by more than twice the rate of inflation in April - around 8 per cent. The Government is only giving councils a small increase in their grants, but has relaxed council tax capping limits, leading many local authorities to make big increases in their council tax bills.

There are massive variations in council tax bills across the country, depending not only on the amount that a local authority spends but also related to the size of grant it receives from central government, as well as the Government's "cap" on its expenditure.

Also taken into account are how much historic debt the council is paying off, and whether it is still collecting old debts, such as the poll tax. The council tax for a typical band D property - worth between pounds 68,000 and pounds 88,000 (anywhere in the country) - may be as low as about pounds 500 in some places, but is more than pounds 1,000 in others.

The highest council tax increase may be in Leicester, where the local authority intends to raise bills by 26 per cent, taking the tax on a band D property to pounds 769. Many other councils are likely to raise their bills by about 10 per cent, including Newcastle, Sheffield, Southampton and several London boroughs such as Camden.

Some councils intend to make only small council tax increases, including boroughs that have traditionally set very high tax levels. Lambeth, in London, is trying to avoid an increase, or even cut its tax - its band D tax is currently pounds 665. Also in London, Hackney's band D council tax is now pounds 796, and may be held at this level or rise only slightly.

Manchester residents are likely to face one of the highest council tax levels. Although its increase will be only 6 per cent, this will take a band D property to a tax of pounds 1,163.

A few London boroughs are offering discounts either for early payment, or for payment by direct debit. Lambeth gives residents a 2 per cent reduction for using direct debits. Brent offers a 5 per cent discount and Lewisham a 3 per cent discount to people who pay their full year's bill at the beginning of April. Hackney council is not giving discounts, but taxpayers who pay by direct debit are entered in a prize draw to win pounds 1,000.

The Government had been expected to introduce new higher rate council tax bands, increasing the tax rate on the most expensive properties. But this proposal is rumoured to have been dropped because of the cost of revaluing larger houses.

Possibly the worst council tax news is for owners and occupants of large properties, in bands F, G and H - which means properties deemed to be worth more than pounds 120,000 - who also receive state benefits. From April they will no longer be entitled to council tax benefit to the full value of their council tax bill. Their benefit will be restricted to the equivalent of their council tax bill if they lived in a cheaper, band E, property.

The change was introduced by the last government, but incoming ministers have not overturned the measure, which will affect about 60,000 people, most of whom live in the South-east.

The National Association of Citizens' Advice Bureaux has condemned the benefit change, which it says will badly affect many poor people in London. It points out that while properties worth more than pounds 120,000 may be regarded as luxurious in the north of the country, in London it will hit even some housing association tenants.

But the Government has also introduced changes to the regulations controlling collection of council tax that have been welcomed by consumer groups. The National Consumer Council has campaigned against the use by local authorities of private bailiffs to collect overdue debts. Last month the Government announced that local authorities will have to abide by stricter controls on debt collection. From April debtors will have to be given 14 days' notice of court hearings and from October only certificated bailiffs can be used by councils for the recovery of council tax debts - although less regulated private bailiffs can still be used to collect housing rents. Consumer groups hope that this will lead to fewer complaints about bailiffs forcing entry to seize goods to be sold at auction at below their market price, in order to repay debts that are sometimes only slightly overdue.

Home owners in much of the country are likely to feel aggrieved by their council tax banding. Properties are taxed according to their 1991 value, since when the value of many properties has slumped. However, council tax payers have no right of appeal against their tax banding based on the drop in the market value of their home.

Tax payers can appeal, though, if there is a "material change" affecting the value of their home.

If, for example, there is a supermarket at the end of their road, the local school has been closed, an airport flight path is being used, or a housing estate has been built at the bottom of the garden, then there may be grounds for reassessing the council tax banding of a property.

In each case, the resident will have to show that the value of the home has moved into a lower band because of the new circumstances, based on 1991 prices.

Appeals are lodged with a valuation tribunal, which can be contacted through the valuation office listed in the local phone directory. A surveyor can assist with the appeal, but it is wise to agree a fee for the work in advance to ensure that the council tax saving is greater than the professional fees.

Tax bandings*

Band A, up to pounds 40,000

Band B, pounds 40,001 to pounds 52,000

Band C, pounds 52,001 to pounds 68,000

Band D, pounds 68,001 to pounds 88,000 (the "average" band across the

country)

Band E, pounds 88,001 to pounds 120,000

Band F, pounds 120,001 to pounds 160,000

Band G, pounds 160,001 to pounds 320,000

Band H, pounds 320,001 upwards

*Anywhere in country, based on 1991 valuations