Newsbeat's guide to... council tax

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Page last updated at 12:29 GMT, Thursday, 31 January 2013

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By Amy Gladwell
Newsbeat reporter Recycling bins

It's claimed millions of the poorest households in England will face council tax rises from April 2013.

The warning has come from the Resolution Foundation, a research group which campaigns for people on low and middle incomes.

It says three-quarters of local councils in England will pass on a 10% benefit funding cut made by central government, meaning a typical council tax bill would rise by between £100 and £250 per year.

In Wales the cut is being absorbed by the government.

In Scotland the cost is being shared between the government and councils, so support for low-income households will stay the same.

The changes do not apply to Northern Ireland.

Ministers say welfare cuts are vital to tackle the government's budget shortfall.

What is council tax?

Council tax is the only tax set by local government.

It contributes an average of around 25% of local government revenue.

The majority comes from central government grants and from business rates which are collected centrally and redistributed to local authorities.

How much do you pay?

Council Tax Valuation Bands

A Up to £40,000
B Over £40,000 and up to £52,000
C Over £52,000 and up to £68,000
D Over £68,000 and up to £88,000
E Over £88,000 and up to £120,000
F Over £120,000 and up to £160,000
G Over £160,000 and up to £320,000
H Over £320,000

Values based on price on 1 April 1991

All homes are given a council tax band by the Valuation Office Agency (VOA).

It's based on the value of your home on 1 April 1991.

It applies to all domestic properties, including houses, bungalows, flats, maisonettes, mobile homes and even houseboats.

If you are renting a shared house and all the tenants pay rent separately, your landlord should be paying the council tax.

What does council tax help to pay for?

It helps to pay for local services including police, fire, recycling, rubbish collections, children's play centres and leisure centres.

Libraries, parks, flood defences, roads (not motorways), street cleaning and museums are on the list too.

It also includes the subsidising of public transport, social housing grants, environmental health and food safety in pubs, restaurants and shops, planning services and CCTV installation.