A new analysis has exposed a troubling inequality in Britain’s council tax system, revealing that homeowners in expensive properties can pay a fraction of the amount paid by those living in modest homes, relative to their property’s worth.
Research from PropertyData shows that Londoners pay just 0.27% of their home’s value in council tax annually—the lowest rate in the country. Meanwhile, residents in Newcastle Upon Tyne and Preston pay nearly three times that proportion at 0.79%, despite having significantly less valuable properties.
The disparity becomes even more striking when examining specific examples. A £3.46 million home in Kilburn, North West London, pays only 0.03% of its value in annual council tax. By comparison, a much more modest home in Preston worth £202,500 pays 1.67% of its value—over 50 times more proportionally.
Why the current system no longer works
The root of this inequality lies in how council tax works. Properties are classified into bands A through H based on their 1991 values—over three decades ago. A revaluation should have taken place every five years. However, the revaluation was ‘temporarily’ pushed back by John Major’s government, supposedly for a couple of years. The Blair/Brown government followed from May 1997, and over a decade passed during which a revaluation should have taken place. For political reasons, Blair decided that this should not take place which has left us with this legacy issue today.
Areas where property prices have skyrocketed since then, particularly in London and the South East, now contain multimillion-pound homes still taxed as if they’re worth a fraction of their current value.
For example, that £3.46 million Kilburn property remains in band F, which was designed for homes worth £120,001 to £160,000 in 1991. Its owner pays just £2,940 annually. Meanwhile, a band F home in Preston worth only £202,500 pays £3,396—more in absolute terms, despite being worth 17 times less.
Potential solutions
With the government reportedly considering reforms, several proposals have emerged. Think-tank Onward has suggested replacing both stamp duty and council tax with a single annual property levy of 0.44% on the first £500,000 of a home’s value, capped at £2,200.
A simpler alternative would be adding new council tax bands above the current H band to capture ultra-expensive properties. Housing experts believe this would be easier to implement than completely revaluing all properties, though any reform faces political challenges since it would inevitably mean increases for some homeowners.
Until reforms arrive, millions continue paying wildly different rates based on where they live rather than what they can afford.