MARTIN Lewis has issued an urgent warning for half a million households who are overpaying an essential bill.
Council tax is set to go up by 5% for millions of households in April, and the money saving expert how explained how you can beat the hike.
Martin Lewis issues urgent warning for council tax bill payers
Speaking on the Martin Lewis Podcast on BBC 5 Live yesterday Martin revealed that around 400,000 people are in the wrong council tax band.
If you’re one of them it means you are paying more for your bill than you need to.
It’s all down to rates being set according to property values in 1991, and prices have changed a lot since then.
If it turns out you’re in the wrong band, you could save thousands of pounds on your council tax bill.
You could even get the lower bill backdated meaning you get some cash back too.
Martin also explained how you get your money back if this is the case.
He said that thousands of people have done this previously and have managed to get pay outs of £100s or even £1,000s.
Speaking on the podcast he said: “It’s estimated that up to 400,000 homes are in the wrong band.
“Some of them will be in too low a band, and some of them are in too high a band – if you’re in too high a band then you may be able to get your band lowered and a backdated pay out.”
Martin then revealed that a fan of the show had written to him and said that following his advice in 2008 she managed to get a £2,000 refund after having her tax band lowered.
She also has managed to make considerable savings since then on her council tax bill.
The money expert explained that if you are found to be in the wrong band you can get a backdated pay out going back to when you moved into the property or 1993, whichever is sooner.
You can also get the tax lowered so you save cash over the remaining time you’re in the house.
Martin went on to outline the method in which you can challenge your council tax band.
There’s two steps to do this, the first is to compare your band to near by similar or identical homes.
If you do find similar/identical properties are in a lower band to you then you have “the first tick”.
Although Martin said he would not recommend moving forward if you don’t have the second tick.
The second step is called the “valuation check” which indicates you have a good case if you challenge your band.
This is where you work out what your house was worth in 1991, when the bands first came in.
Martin said: “If both that and the first check show that you are in too high a band, then you want to get in touch with the council tax office, the valuation office agency or the Scottish Assessor’s Association.
“You can say to them ‘I believe that my council tax band is not correct and I would like you to assess it’.”
If you are successful Martin explains that you can have you bill lowered and a council tax pay out worth “many thousands of pounds”.
But anyone who goes ahead with asking for an official assessment of their council tax band should be warned they could end up paying more.
This is because you can’t ask for your band to be lowered, instead you have to get it assessed – which means it could go up.
The council could decide you are in a council tax band that means your bill is higher, so check carefully before challenging your council tax band.
Government figures from last year show that almost one in three (31%) people who challenged their band last year got a council tax reduction.
The majority of people (61%) stayed in the same band, but a lucky 11,687 ended up having to pay less council tax.
Just 0.1% of people saw their council tax bills go up as a result of a review – or 40 households in total.
How to check if your council tax band is wrong
First, you need to find out what council tax band you are in.
You can find out your council tax band by checking with your local authority or on the postcode checker.
There are two checks you need to make before challenging your council tax band – the neighbour test and the valuation test, according to MSE.
The neighbour test
The first is checking what your neighbours are paying.
You can check this really simply on either the Valuation Office Agency (VOA) or the Scottish Assessor’s Association (SAA) in Scotland.
You want to look at properties that are of similar size and value to yours.
If all your neighbours are paying less than you, this could be a good indicator that you’re in the wrong band and overpaying.
But be warned, the government could decide that actually your band is right and they’re all underpaying.
You won’t have to pay any extra, but your street could be stuck with higher bills which could sour relations.
If you are paying less than your neighbours then an assessment is riskier and you could be stuck with a higher bill.
The valuation test
The second thing to check is what your house was worth in 1991, to see if it was put in the correct band.
To do this, you’ll need to start with a more current valuation. If you bought your house after 1991 you can start with the date and price you paid, but otherwise you need to dig deeper.
You can often see previous sale prices on property websites such as Zoopla and Rightmove.
If you rent, or you bought before 1991, use these sites to find the earliest sale price you can and make a note of the date and price paid.
Next, check neighbouring properties to make sure that your house wasn’t an outlier.
Once you have your valuation, you can use MoneySavingExpert’s clever calculator to estimate what the price would have been back in 1991.
If the price is lower than the band you’re in, this suggests you may have a good case for a re-evaluation.
If the price is higher then asking to challenge your band could well end in higher bills and isn’t worth the risk.
Money Saving Expert says that if your house passes both the neighbour test and the valuation test it’s worth challenging.
If you just pass the neighbour test – you could still challenge and you probably won’t end up with higher bills either way but your neighbours could end up paying more.
If you fail both the tests then a challenge is a very risky move and you probably shouldn’t consider it.
MSE also warns that even passing both the tests doesn’t guarantee that you’ll get a reduction.
How to challenge your council tax bill
If you decide to go ahead with a challenge, contact the Valuation Office Agency (VOA) in England and Wales or the Scottish Assessors Association (SAA) in Scotland to do this.
Make sure you’ve got the evidence to hand showing you’re paying more – this could be having addresses of similar properties to yours in a lower band, for example.
If the VOA agrees that your property is in the wrong band, it will contact you to let you know your band will be changed.
This can take up to two months for the VOA to review your case – so you might be in for a long wait.
But while you could get moved to a lower band and pay less, there’s also the chance the VOA could find you’re not paying enough.
This could mean you’re moved to a higher band.
In some cases, entire streets have been rebanded upwards – which won’t make you popular with the neighbours.
If you disagree with the VOA’s ruling, you can appeal your case – but only if you’ve been told that you can when you get the decision.
You must appeal within three months of your decision – to do this, get in touch with the Valuation Tribunal Service.
If the Valuation Tribunal agrees with you, it will get the VOA to change your band – and your bill will change.
If you’re moved to a lower band, you’ll get a refund of council tax going back to the date you moved into the property.
But if you’re moved to a higher band, you’ll start paying an increased rate of council tax straight away.
Meanwhile, we reveal how to get your council tax reduced or even free – check if you’re eligible.
Plus, how to check if your council tax will go up this year.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected]
