Highland Council Taxes 2007-2008

How they compare by region and suggested changes

By Keith A. Forbes and Lois A. Forbes at keithaforbes@btinternet.com Scottish disability and pensioner activists. Keith, permanently disabled, is a member of Age Concern (Scotland). Some Highland Council Taxes compared to other properties of higher market value but lower Council Tax banding are grossly unfair and discriminatory for many reasons including the fact that banding dictates what water charges couples or individual owners have to pay Council Taxes should be standardized by value of property to make them fair.  Currently, some pensioners and others don't pay them at all. Exemptions should be more strictly and more fairly controlled.

Average net council tax per dwelling as a percentage of full basic state pension

• 1997–1998: 17.4
• 1998–1999: 18.2
• 1999–2000: 18.9
• 2000–2001: 19.9
• 2001–2002: 19.7
• 2002–2003: 20.5
• 2003–2004: 22.5
• 2004-2005: 24.00
• 2005-2006: 24.90
• 2006-2007: 26.70
• 2007-2008: 27.90

Highland Council annual Council Taxes and Scottish Water charges for the financial year 1st April 2007 to 31st March 2008 

• Applied by the Highland Council.  Council Taxes cost approximately the same here for a semi-detached or detached property - bungalow or house - with a market value of under £200,000 as they do for a semi-detached property with a market value of over £850,000 in London.  See Scottish Council Taxes. According to the Highland Council Information Leaflet, Council Tax Bands are supposed to "reflect the Assessor's opinion of what the market value of your property would have been as at 1 April 1991. They include annual Scottish Water charges for the financial year 1st April to 31st March.

One person alone living in the property is entitled to a Single Occupancy Discount of 25%. More than two occupiers who are not full-time students mean that the Band rate is increased by more than £500 a year, unlike in the USA, Canada and other places where one rate applies irrespective of the number of occupants. Deductions and rebates are available for those who qualify.

Newcomers who want to conserve water and would like to be able to get a water meter to their homes instead of paying the rates above - as they have in most parts of England - will be disappointed. Scottish water does not have them in this area.

The unfairness and lack of uniformity of the present system

For over 17 months, believing our Highland Council Tax Band was (a) uniformly applied to reflect market values at 1 April 1991, as the Highland Council states in its Council Tax leaflet, and (b) was standardized, we scrimped and saved and did without some essentials, to pay our Council Taxes. From January 2004 through March 31, 2005 we paid a year in advance. We are no longer willing or able to do this. We believe we are due a refund for excessive Council Taxes paid to date. Why?

Because:

• Ashcroft, 15 Victoria Road, East Brora Muir, 1.31 acres, half crofted, half decrofted, for sale in December 2003, valued at £115, 000 is Band E. Compared to higher market priced properties on either side of us which are Band D.

But the following properties, worth much more, are paying so much less, as advertised for sale by the online Highland Solicitors Property Centre

• 23 Castle Hill Gardens, Cradlehall, Inverness, for sale in April 2005, for over £150,000. Band D.
• Inchvannie Cottage, Strathpeffer, for sale in April 2005, for over £150,000. Band D.
• A'chomaraich,  East Brora Muir, Victoria Road, Brora, 1.4 acres, for sale in April 2005, for over £155,000, Band D.
• Croft 146 Lady's Loch, Brora. With upgraded house. For sale in April 2005. 0.135 hectares decrofted, 2.135 hectares crofted, for over £160,000. Band B.
• Wyvis Lodge, Cullicudden, Ross-shire, for sale in April 2005, for over £165,000, Band E.
• Sumandar Villa, Harbour Road, Brora, for sale in May 2005, over £170,000. Band C.
• Braeside, Gower Street, Brora. For sale in May 2005, over £172,500. Band E.
• 7 Druid Temple Way, Inverness, for sale in May 2005, over £183,000. Band F.
• Clais An Torrain, Church Road, Kyle of Lochalsh,  for sale in May 2005. Over £190,000. Band E.
• 3 Woodside Gardens, Invergordon, for sale in May 2005. Over £194,000. Band F.
• Sycamore, Duirinish, by Kyle of Lochalsh, for sale in May 2005. Over £200,000. HSPC ref 21326. Band D.
• Brae Mhor, 4 The Meadows, Muir of Ord, for sale in April 2005, for over £205,000. Band F.
• Whinbank, Moss Hill, Brora, for sale in April 2005, for over £210,000. Band F.
• The Haven, 20 Golf Road, Brora, for sale in April 2005, for over £220,000, Band E
• 33 Clashmugach, Clashmore, Dornoch, for sale in April 2005, for over £225,000. Band F.
• 56 Bayne Drive, Dingwall, for sale in April 2005, for over £225,000. Band G.
• Tigh na H'acarsaid, Ardindrean, Loch Broom, for sale in May 2005. HSPC reference 21318, for over £235,000. Band F.
• Kin-Brae House, 36 Culduthel Road, Inverness, for sale in April 2005, over £240,000. Band G.
• The Lodge, 22 Drummond Road, Inverness,  for sale in April 2005, over £245,000. Band F.
• 32 Elizabeth Crescent, Dornoch,  for sale in April 2005, for over £250,000. Band E.
• Ardgay House, Ardgay, for sale in April 2005 for over £260,000. Band G.

Council Tax has more than DOUBLED since 1995. Over the same period, by way of comparisons, basic State pension has risen by 38%, average earnings have risen by 50%. Have Councils become more efficient to justify the doubling of the tax since 1995? No. They have become far less value for money than ever before.

Currently, Councils say their Council Tax Bands reflect the opinion of the Assessor of the Council Tax region concerned of what the market value of the property would have been as at 1 April 1991 - a very antiquated way of doing things, given the prices since then of most homes. They simply have not bothered to upgrade their methodology for doing so in the interests of the public for 14 years, yet their budgets and Council Tax increases have been yearly. It is disgraceful.

What makes it worse is that their Council Tax payers have to pay water and waste water rates depending on their Band, instead of a standardized rate. Also, Council Taxes vary on the amount of persons living in the house. In the USA, Canada, etc. the same rate applies irrespective of how many live there.

Here in the UK, some property owners are "too poor" to pay Council Tax because of little or no reported income, or exist mostly on pensions; others are exempt from being taxed, such as full-time students - and that of persons who pay council tax, only one person living in a property gets a 25% discount and more than two persons living in a property means a supplement.

Some, who are on both corporate and state pensions (social security) apply for and get total exemption, while others who have neither, pay full Council Taxes. 

In the more democratic and civilized countries of the New World, property owners are deemed to be able to afford to pay taxes instead of spreading the tax burden on other tax payers, some of whom cannot afford to own their own homes. And they apply uniformly, to a particular property - not to the number of people who live there.

There is mounting anger in many quarters, especially in the Highlands and Islands of Scotland, over Council Taxes, their huge rises in recent years, the unfair way they treat homeowners who are pensioners on fixed incomes, the lack of standardized rates nation-wide, the huge differences in methodology of different councils, the fact that despite the average market price now UK-wide exceeding £150,000 for a property and value of estate duty of £274,000, some people with properties worth less than £135,000 - less than the national average are paying Band F Council Taxes - the third-highest rate - while others are paying Band A-C. Instead of being a huge incentive to attract and retain newcomers to settle in the area, they are a huge disincentive.

When the Government ensures that key items such as income taxes, payroll taxes, social security, allowances, benefits, road taxes, estate duty, postage stamps and many more are standardized, not in accordance with Council Taxes and where you live but to established national overall criteria, it is criminal that it allows Council Taxes, water and waste water charges to have such deliberately starkly discriminatory lack of non-standardization. 

Pensioners who need or want to downsize their homes also look for ways to save on Council Taxes, not increase them. They will migrate to places with less Council taxes, not more. They will be shocked to know that while the huge majority of persons in the Highlands and Islands of Scotland live in properties with a market value of less than £140,000, they are paying Council Taxes far higher than the UK national average because of lack of UK-wise standardization in Council Taxes. In most other places in the UK, properties worth far more - for example, £190,000  - would be in Band C or lower, not higher.

And to suggestions from political parties and others that these Council Taxes be replaced by an area Income Tax, who will administer them? The same Council Tax authorities who presently make Council Taxes so discriminatory?  All the more reason to have them administered both centrally, uniformly and in a completely standardized way like other taxes, so that the same Council Tax Bands apply to properties carrying the same market value nationwide.

There are also some serious legal questions, such as:

• Would-be buyers should refuse to buy when the advertised market price of a particular property is more than the advertised Council Tax Band. It could mean an imminent rise in the Council Tax Band. Councils should be expected to give advance note of Council Tax increases.

• Would-be buyers should also refuse to buy when Council Tax Bands are more on a particular property than they are on other properties advertised or known to be of similar or higher market value. It means something is wrong. Either the Council Tax Banding is unfair or the house is over-priced.

• Would-be buyers are therefore urged to make a thorough comparison of both advertised market prices of properties for sale and Council Tax Bands of properties before they commit. They can usually do so via a good online resource such as Highland Solicitors Property Centre. If a solicitor or estate agent does not show a Council Tax Band of a particular property, either ask for it immediately or ignore the property completely.

Range of values

In Scotland, Band Values are assessed by the Council concerned, whereas in much - of not all - of England, they are assessed by the Listing Officer of the Valuation Office Agency of the Inland Revenue, a much fairer system.

In England, but not in Scotland, Band Values are usually shown thus by each Council Tax area:

Present banding and range of values

Suggested re-banding and range of values UK-wide

We believe 

• Bands A to B should be amalgamated and increased to £80,000 at the top end. 

• Bands C to D should be amalgamated, from £80,001 to top out at £145,000. 

• Band E should be from £145,001 to £180,000

• Band F should be from £180,001 to £250,000

• Band G should be from £250,001 to £350,000

• Band H should be from £350,001 to £400,000

• Band I should be from £400,000 to £500,000

• Band J should be from £500,000 to £800,000

• Band K should be above £800,000

All valuations by the UK Government's or Scottish Executive Valuation Office, NOT your Council.

Do persons who live in lesser-priced houses use less water and go to the bathroom less times? NO. Do persons who live in the other properties use more water and go to the bathroom more times? NO. So why are they prejudiced against, discriminated against - and made to pay three times more for water and waste water? Do water companies routinely ask homeowner singles or couples in Band D to H properties if they can and would like to affix a water meter to their homes to more fairly judge the true cost of water they use, compared to others? NO. Water companies should be compelled to do this. Do the water companies in England or Scottish Water in Scotland, or organizations such as WaterVoice in England and Water Customer Consultation Panels in Scotland promote such fairer use of water? No. Even persons who are disabled can't get a reduction on their water, unless they are on benefits, qualify as a home owner or tenant, have a medical condition that requires using large amounts of water, have three or more children under 16 and have a water meter. All they can apply for is being put on the Vulnerable Persons Register, which none of the water companies or kindred organizations advertise may be available.

Owners overpaying their Council Taxes compared to banding of other properties and objecting to it have a choice in what to do.

Examples.

• Is it right that some persons in similar or higher-priced properties should be exempted tax completely while others pay for it - and are not allowed to appeal against the injustice after 6 months of ownership? NO. 

• Should you write to formally demand access to all Council Tax Bandings of all properties of similar assessed value plus those of lesser and greater Banding under the Freedom of Information Act (Scotland) 2002 within a timeframe of 20 working days? YES. Under the Act the Council cannot ask why the individual wants to know the information and all its work documents may be open to public scrutiny.

• Should you report the matter to your local, regional and national newspapers? YES.

• Should you refuse to pay the Council Tax? NO. But:

• Instead, pay only the Council Tax for similar market-priced properties in your Council Tax area? In our view, YES. (But at your own risk)

• Should you appeal against to the arbiter appointed by the Council? YES. 

• If you  are a member of Age Concern Scotland or any other group, should you report it to them and ask them to lobby? YES

• Should you lodge a formal complaint with the European Court of Human Rights against your Council? YES. Most emphatically.

• Should you have a right to expect your Council Tax not to rise by more than the cost-of-living index each year? YES. But this what might well happen to some of the houses listed above. Be warned.

Should Council Tax be replaced by a local income tax?

If implemented, a Scottish Service Tax will exempt low-income earners altogether and collect tax using a rising scale of percentages according the different income levels.  This is expected to effect a redistribution of income and, because the measure is expected to bring in more monies that the existing Council Tax, the intention - in England but not Scotland - is for domestic water and sewerage charges to be removed altogether.

There are many arguments for replacing what is seen by the Scottish Parliament as an unfair tax. They include the problems caused by increases in property prices, of allocating properties to the appropriate Council Tax band.

The new tax is not strictly a “local” income tax because the rates will not be set locally.  The Bill does not specify how the tax should be collected. Local Scottish authorities can collect it locally if they wish,  but it is intended that the collection process will be contracted-out to the Inland Revenue. The latter already maintains a register of Scottish employees in preparation, if it ever occurs, for the Scottish Parliament to make a change to the basic rate of income tax for Scottish residents.   Also, the Inland Revenue’s collection costs are considerably lower than the costs incurred currently by local authorities in collecting Council Tax.

The income bands and percentage tax rates set out in the Bill are as follows:

Points to note:

• An employee’s “relevant income” is not the same as taxable income for PAYE income tax purposes.  
• An employee’s tax code will not be relevant to the calculation.  
• The tax is not based on the total income of a household but on the earnings of each individual in the household. 
• An employee whose earnings are less than £10,000 will not pay any Service Tax, as an automatic exemption. (There are an estimated 635,000 persons, including pensioners, with income of less than £10,000 in Scotland, 26% of all tax-payers).
• An employee with a salary of £20,000 will pay £450 Scottish Service Tax, i.e. £10,000 @ 0%, plus £10,000 @ 4.5%
• An employee with a salary of £45,000 will pay £3,150 Scottish Service Tax, i.e. £10,000 @ 0%, plus £20,000 @ 4.5%, plus £15,000 @ 15%. 
• An employee with a salary of £100,000 will pay £13,100 Scottish Service Tax, i.e. £10,000 @ 0%, plus £20,000 @ 4.5%, plus £20,000 @ £15, plus £40,000 @ 18%, plus £10,000 @ 20%.

Good aspects

• Gets rid of often extortionate water and waste water charges  when when linked to grossly unfair Council Banding methodology
• Presumably consolidates both water and waste water charges in new Scottish Service Tax
• Eliminates the need for a separate sales or purchase tax, to further escalate the price of a property
• Absentee owners will pay the full tax too, without a discount.

Bad aspects

• It is fundamentally wrong, unjustified and not done in the more democratic countries of USA, Canada, etc. to impose an income-based tax on an investment such as a domestic property that does not produce any income from it except when you sell it and usually produces on a yearly basis only expenses, not income, in upkeep, upgrading and maintenance and repair. If imposed anyway, will homeowners be able to apply expenses in this regard to "relevant income"?  An income-based tax makes sense only for a property that produces income on a regular basis, such as a hotel or guest house or bed and breakfast or rented-out self catering accommodation, or shop, or farm, or other business. If their proprietors are themselves living wholly or partly on the premises as well, they are already entitled as self-employed persons to claim expenses against their gross income - and should equally be entitled to do so under a Scottish Service Tax.
• Does not provide for a UK-wide standardized plan, so that properties can be rated fairly, uniformly and impartially for valuation, market price sale or purchase, estates, death duties, etc purposes
• Creates new barriers for incomers to negotiate differences between Scottish and English methodologies when downsizing or upsizing properties
• In areas where there is a shortage of affordable housing, or when there is a financial or family need for houses to be sold, there is no incentive for say a child or children not living there to sell the property when parents die. In comparison to this, it is the practice in the United States of America, Canada, etc, that if you cannot afford the (standardized per market or assessed value) taxes, you don't buy, you sell.
• Means that whenever a property is sold and bought, the Banding is likely to change. Will create problems, more paperwork and more bureaucracy for real estate agents representing buyers and sellers and could lead to increased buying and selling costs. How will they be able to show a taxable rate (as most show now with the relevant Council Tax Band) if it will vary so hugely depending on the income or incomes of the purchaser or purchasers?

Least imperfect Council or Service Tax 

• standardizes all Council Taxes throughout the UK. 
• Requires all Councils to publish Bands of each property in their council, with values.
• uniformly assesses the value of each property not according to a Council's decision but the UK Government's Valuation Office. The present system is obscenely unfair.
• Operates on the USA and Canadian state and provincial systems of property taxes at a uniform rate irrespective of the estimated or actual or sale value of the property, whichever is the higher, for example, in the UK, £14 per £1,000 of value, with a ceiling of say £1 million instead of the present ceiling of much less.
• Publicly discloses what the Council Tax Banding and current evaluation rate of each property is and what they will be when re-evaluated.
• Makes it mandatory for estate agents selling property to disclose the Council Tax Banding for the property for sale.
• Gets rid of water and waste water charges by banding.
• One that does not impose a tax on buying and selling. This would merely add further - and intolerable - expense to already the most expensive property in the whole in Europe and with no such tax applicable in USA or Canada or any civilized country except Bermuda - and in its case only to non-nationals. But there is a case to be made for re-banding upwards when the property sells, so long as property values and Council Tax Bands are not out of line with properties on either side of it.
• Has far stricter controls on total or partial exemptions for pensioners, the severely disabled and those whose income is low, to reduce fraud and make it more equitable to others. One way of controlling it would be to create a rule stating that no Council Tax concession will apply on any house valued at more the national, for example £183,000 (or Scottish, English, Welsh and Northern Irish averages if not possible nationally) average of a mid-priced house based on actual market value. It would be grossly unfair to the truly needy in lower-priced homes if owners of higher-priced homes were to receive any Council Tax benefit. Roads, schools, fire services and more have to be paid for and it is not fair that some property owners should be exempted to make others pay proportionately more unless there is an equitable way of doing so.
• Eliminate the present lower Council Tax Band rate on properties with no mains water or mains sewage. Some of these properties are worth much more than some properties with both mains water and mains sewage. 
• Eliminate the discounts for owners of more than one property, not just locally but nationally.
• Pegs future Council Tax increases to no more than annual inflation rate or rate of increase of social security pensions, whichever is the higher.
• Requires Councils to advertise or otherwise release publicly the names and salaries applying to each, of all Council Staff members earning more than £25,000 a year in largely rural Councils and £30,000 a year in others. Currently, although paid by Council Tax payers, Councils do not state in their publicity what their top and middle management officials earn. The principle of local democracy is not being invoked. Local people should be able to decide what should be spent on their services. Local people should be able to kick out a council if they are not happy with it, or vote it back in if they are happy with its priorities. They should be able to vote on its priorities. If the central government seriously wishes to tackle council tax rises, they must deal with the balance of funding crisis and give more power to councils to raise more money themselves.

Your point of view is crucial

Send your comments to 

• The Clerk to the Local Government Committee, Room T.3.40, Tower 2, The Scottish Parliament, Edinburgh EH99 1SP. Email localgvt.transport@scottish.parliament.uk. Chaired by Sir Peter Burt, it has now presented its report, entitled "A Fairer Way."
  The Burt Report is available on the internet at http://www.localgovernmentfinancereview.org/report/docs/lgfrc-report.pdf. Be warned, it is over 200 pages long. (Is it indeed fairer? You decide).
• Your local MSPs 
• Your local MP.

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By Keith A. Forbes, at keithaforbes@btinternet.com. 
© 2006. Revised: April 25, 2007