Five council tax changes Labour could make from October

The Autumn Statement from the new Labour Party Chancellor could shake council tax bills up massively, according to a tax expert.

Chancellor Rachel Reeves could launch a massive shake up of council tax in the October Budget. The Autumn Statement from the new Labour Party Chancellor could shake council tax bills up massively, according to a tax expert.

Dan Neidle has spoken to the Telegraph newspaper over the potential options open to Ms Reeves. It comes as she tries to plug a multi-billion pound black hole which was supposedly left by the Conservative Party government.

Mr Neidle, founder of campaign group Tax Policy Associates (TPA), urged the Government to tweak the system so homeowners whose properties are worth over £2m pay more. But the proposal would f hit the owners of over 100,000 properties with thousands of pounds in extra bills.

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Mr Neidle estimated the move could raise between £1bn and £5bn.

Re-evaluating current bands

The amount charged per band is set by local councils. Mr Neidle urged the Chancellor to address these discrepancies. Writing on the TPA website, he said: “It’s indefensible that an average property in Blackpool pays more council tax than a £100m penthouse in Knightsbridge. The obvious answer is to ‘uncap’ council tax so that it bears more relation to the value of the property – either by adding more bands, or applying say 0.5pc to all property value over £2m.

“The argument seems compelling for any government, and particularly a Labour government. And whilst Labour promised not to change the council tax bands, that was in the context of revaluation, not adding more bands at the top.”

Adding MORE bands

In the current system, all properties over £320,000 attract the same level of council tax. However, under Mr Neidle’s first proposal, there would be additional bands and higher valued properties would pay incrementally more.

Target multi-million pound homes

Under the second proposal, multi-million pound houses would attract an annual charge of 0.5 per cent of their value over £2m. This would mean a house worth £4m would start receiving an annual bill of £10,000.

Abolish and replace with new system

The campaign group Fairer Share has campaigned for a “property tax” based on an across the board 0.48 per cent calculation on the current value. They also only want owners, not tenants charged, meaning landlords with multiple properties would be hit hard.

Other suggestions are replacing business rates, stamp duty land tax and council tax with a “land value tax.”

Council tax discount

The Treasury has denied that the single person council tax discount, which offers 25pc off for those living alone, would be scrapped in the Budget on October 30. Elliot Keck, of campaign group the TaxPayers’ Alliance, said: “Under no circumstances should taxpayers have to put up with yet another round of blanket rate rises.

“While there are reasonable discussions to be had about reforming the banding system, the result of any changes should be that residents overall pay less given the enormous pressures on household budgets. Local government should be focusing on boosting productivity and finding efficiencies, and not be holding out hope that they’ll be saved by yet another cash injection.”