Scotland's council tax system relies on home valuations from 1991, and a new analysis suggests that a majority of Scots are unhappy with the current arrangement. A survey conducted by TAXD found that 54 per cent of Scottish adults would cut council tax if they were in charge.
The Problem with 1991 Valuations
The system means that a home worth £60,000 in 1991 would sit in Band E in Edinburgh, with a bill of £2,136 this year, while the same house in Reading would fall into Band C at £2,323. This discrepancy extends further, with a Band H mansion in Wandsworth, London, paying about £2,056, while a mid-range Band D home in Reading costs £2,613.
Two neighbours with similar homes today can sit in different bands because of 1991 prices. A pensioner who bought decades ago may live in a home that has soared in value while their pension barely moved. Council tax looks at bricks, not bank balances.
Previous Changes and Proposed Reforms
In 2017, Holyrood raised charges on Bands E to H by between 7.5 per cent and 22.5 per cent. A Band H home now pays 2.45 times the Band D rate, compared to twice in England, but the 1991 values remained unchanged. Ministers now want two new bands for homes worth £1 million or more, valued at 2026 prices, meaning only a handful of mansions would get a modern valuation.
Arjun Kumar, Co-Founder and Co-CEO of TAXD, argues that reform is overdue. He proposes revaluing every home and phasing in the changes. Analysis for the Scottish Government suggests a revaluation would move about a quarter of homes up a band, a quarter down, and leave half where they are. Nearly two-thirds of Edinburgh homes could go up, while almost two-thirds in Aberdeen could go down.
Long-Term Solutions and Protections
Kumar suggests spreading increases over several years to allow families to plan. Longer term, he advocates for a land value tax, which charges the value of the land under a building and ignores what is built on it. This would reward using land well, making sitting on a derelict site expensive and building homes more attractive.
To protect those who are asset-rich but cash-poor, Kumar recommends strengthening council tax reduction for low incomes and allowing pensioners on modest incomes to defer part of the bill until the home is sold. He also stresses that a fairer system would probably raise about the same overall, with some paying more and some paying less, and ministers should say so plainly.
Kumar notes that TAXD's research found people in regular jobs on average incomes feel they get the worst deal from Britain's tax system, and council tax is where they feel it every month. He concludes that after 35 years, a fair bill based on current home values, with help for those whose incomes can't keep up, is hardly a big ask.
