All houses and most other properties in the UK are liable to council tax; money that is paid to local councils and used to fund local services. It was introduced in 1992, as a replacement for the Community Charge or Poll Tax.

Properties are assessed according to their value, in comparison to the value of other properties in the area, and more expensive properties attract higher council tax bills. If you own and live in your own property, you will obviously be liable for payment of the council tax on that property, but if you are a landlord or tenant, the question of who is responsible for payment of the council tax becomes important.

The short answer to the question of who pays council tax, tenant or landlord, is that it is usually the tenant that pays this important bill, except in Houses of Multiple Occupation (HMOs).

What Is Council Tax?

Council tax was introduced in 1992. It replaced the unpopular poll tax, and the proceeds from council tax go towards paying for local services like transport and for the upkeep of highways. Ensuring council tax is paid on time is important. You have the right to pay by instalments, but if you miss a payment, this right is removed, and you will be expected to pay for a full year at a time.

A failure to pay council tax can lead to fines and penalties. Ultimately, if you refuse to pay the penalties and arrears, it is a criminal offence and can actually carry a prison sentence. It is vital, therefore, that you know who is responsible for making the payments.

Council Tax Bands

The Valuation Office Agency, the VOA, determines how much a property would have sold for in 1991, even if the property was not built by that date, or if adaptations have been made since then. The property is then placed in one of eight bands – A to H.

Properties can be reassessed, if the property owner submits a proposal for a band change. Owners that believe their property is in too high a band can lodge a proposal, but not because of natural market movements, only because of a significant change in the property, for example if an extension has been added or if a portion of the property has been demolished.

Who Pays Council Tax – Tenant Or Landlord?

Local councils use what is called a hierarchy of liability to determine who is liable for payments. In the case of rented property, liability for payment usually falls on the tenant. This is because there are discounts applied according to the status of the person living in the property. Single people, or single parents with children under the age of 18, receive a discount on their tax.

The landlord should inform the local council exactly when a tenant moves in and when they vacate the property, ensuring that the individual is only liable to pay council tax on the period when they lived in the house. Liability will revert to the landlord, while the property is empty, and some discounts may be applied if the home was recently refurbished or if it is considered “substantially unfurnished”.

One exception to these rules of liability comes in the shape of Houses of Multiple Occupation.

What Pays Council Tax In HMOs?

A House of Multiple Occupation, or HMO, is a single building that houses three or more families or tenants that share communal areas like kitchens and bathrooms but have their own bedrooms and living areas. The shared areas mean that the landlord remains responsible for payment of the council tax bill. This should be taken into account when calculating profitable rental rates and when calculating rental yields.

Empty Properties

When a property is empty, it is the responsibility of the landlord to pay council tax, but the actual amount that needs to be paid is dependent on whether the property is furnished or not. Local councils offer a discount on unfurnished properties, although an increasing number of local councils have reduced the size of the discount in order to prevent properties from being left empty for too long.

Council tax is an important bill and failing to pay it can lead to substantial penalties that may even include a prison sentence. Claiming that you were unaware of whose responsibility it was to make payment is not enough to avoid liability, and if you are in any doubt as to who should be paying this bill, speak to your landlord or property management company to find out. Landlords can ask their local council for details of liability.

PDF Estates Ltd offers full property management services. Included in this service is council tax determination. We will check your banding, determine whether you or the tenant are responsible for payment, and we can help apply for any discounts that might be available to you. Call us on 020 3815 7952 or email info@pdfestates.com to speak to one of the PDF Estates’ team about our offer of free full management services to all new landlords or about our other landlord services