Council tax is facing growing calls for reform, with experts labelling the current system a 'dog's dinner' that disproportionately penalises less affluent areas. The Resolution Foundation and the Institute for Public Policy Research have criticised the outdated property valuations, which are still based on 1991 prices, as regressive and inequitable.
Chancellor Rachel Reeves is reportedly considering a 'mansion tax' in the upcoming budget as an alternative to raising income tax. Proposals include doubling council tax on properties in bands G and H, or revaluing homes in the top three tiers and applying a surcharge to the 300,000 most expensive properties. However, the Financial Times reports that backbenchers in affected seats are pressuring Reeves to scale back the plans.
The inequality is stark: properties in all bands of London's upmarket Kensington pay less council tax than those in Blackpool, according to the IPPR. Meanwhile, the north-east of England has the highest average band D bill at £2,425, while Greater London's average is £1,981 – a difference of £444.
Stuart Hoddinott of the Institute for Government described the system as 'deeply broken', noting that rates vary widely between councils due to decades of inconsistent decisions. For example, identical band D rates of £1,000 in 2010 could have grown to either £2,079 or £1,477 by 2025 depending on annual increases.
The current system is based on 1991 property values, with bands ranging from A to H. Since average house prices have more than quadrupled, critics argue the tax has become a 'turbocharger of inequality'. Any changes in England could prompt similar reforms in Scotland, Wales and Northern Ireland.
