On the surface the issue of who is liable to pay council tax on a rented property would appear to be pretty straightforward but there are complexities which we will look at covering here to help dispel any confusion.
What Is Council Tax?
First, let’s just take a look at what council tax is and why it needs to be paid: In essence council tax is a levy by local councils to help them to pay for community services like the fire brigade, the police, bin collections, road maintenance and libraries for example. Council tax is calculated on the value of the property as it would have been in April 1991 and is sorted into bands A-H with band A being the cheapest and band H being the most expensive. It is important to understand, though, that the amount of tax to be paid for any given band is different from council to council so there is no guarantee that what you pay in one council area for a band A property, for example, will be the same as what you will pay in another council’s area for a band A property. You can find out how much council tax is payable in each area by visiting the local council’s website and checking their bandings and rates.
Who Pays the Council Tax?
As far as who has to pay council tax, the law sets out what is called a liability hierarchy as follows:
- A resident owner-occupier who owns either the leasehold or freehold of all or part of the property.
- A resident tenant.
- A resident who lives in the property and who is a licensee – this means that they’re not a tenant but have permission to stay there.
- Any resident living in the property, for example, a squatter.
- An owner of the property where no one is resident.
In a rented property it is most likely that the owner of the property does not live there, as such number 1 in the hierarchy does not come into play. Number 2 is a resident tenant, so according to the law, at the least, the tenant is liable to pay the council tax and not the landlord. There are instances, however, when it is not the tenant who is liable for the council tax payments and where this liability falls to the landlord, this applies when:
- The property is in multiple occupation, for example, a house shared by a number of different households who all pay rent separately
- The people who live in the property are all under the age of 18
- The property is accommodation for asylum seekers
- The people who are staying in the property are there temporarily and have their main homes somewhere else
- The property is a care home, hospital, hostel or women’s refuge
- The rental agreement states that the landlord pays for the council tax
- The property is empty and has no tenant.
Normally knowing who is liable for council tax payments is relatively straight forward and the liability in a straightforward rented property falls to the tenant, but this is not always the case so it makes sense for the rental agreement to be specific as to who has the council tax liability.
