How to Avoid Paying Council Tax on an Empty Property in the UK
Updated: Nov 8
Owning an empty property in the UK can be a financial burden, especially when you consider the council tax that comes with it. Council tax is a local taxation system that helps fund local services like education, waste collection, and social services. However, if you have an empty property, you might be wondering if there's a way to avoid or reduce this tax. The good news is, there are several legal methods to do so. This article will guide you through the various strategies you can employ to minimize or even completely avoid paying council tax on your empty property in the UK.
Understanding Council Tax on Empty Properties
Before diving into the ways to avoid council tax, it's crucial to understand how it works. According to the UK government, you'll usually have to pay Council Tax on a property you own or rent that's not your main home. Your local council can decide to give you a discount, and the amount is up to them. If your property has been empty for two years or more, you can be charged an extra amount of Council Tax, known as a 'premium'. The amount you pay will depend on how long the property has been empty. You can be charged up to 4 times your normal Council Tax bill if your home has been empty for 10 years or more.
Owning a property in the UK comes with its share of responsibilities, one of which is the payment of council tax. This tax is essential as it contributes to the funding of local services such as schools, rubbish collection, and the maintenance of local recreational areas. However, the question arises: “Do you pay council tax on an empty house?” This article aims to answer this question in detail, shedding light on the nuances of council tax as it pertains to empty properties.
What is Classed as an Empty Property?
An empty property, in the context of council tax, refers to a dwelling that is no longer someone’s main residence and is unoccupied. This includes properties that are vacant due to the owner moving out, or those waiting to be sold or rented. However, the classification of a property as 'empty' can sometimes vary from one local council to another. It's crucial to check with the local council to understand their specific definitions and rules surrounding empty properties.
Why Do You Pay Council Tax On An Empty Property?
The rationale behind imposing council tax on empty properties is twofold. Firstly, it serves as a revenue source for local councils, enabling them to provide essential services to the community. Secondly, it acts as a deterrent against property owners leaving their properties vacant for extended periods. By imposing a tax, the government hopes to encourage the occupation and utilisation of properties, which in turn can help address housing shortages and promote community cohesion.
Do You Pay Council Tax On a Newly Constructed Empty Property?
When it comes to newly constructed properties, council tax obligations kick in once the property is structurally complete, or when it becomes partially occupied. However, some local councils offer grace periods or discounts to property owners, allowing them some time to occupy or sell the property before the full council tax is charged. The length and terms of such grace periods or discounts can vary widely, so it's advisable to consult with the local council to understand the specifics.
Council Tax Costs for Empty Houses According to the Length of Time Empty
Length of Time Empty
Council Tax Charge
Less than 6 months
6 months to 2 years
Over 2 years
The table above illustrates the general council tax charges for empty houses based on the length of time they have been vacant. However, these rates can vary depending on the local council's policies. Some councils may offer discounts or exemptions under certain circumstances, such as if the property is undergoing major repairs or if the owner is facing financial hardship.
In short, council tax on empty properties is a complex subject with many variables at play. It's imperative for property owners to familiarise themselves with the local council's policies and take any necessary steps to minimize their tax liability, whether that's by occupying, renting, or selling the property. Moreover, staying updated with any changes in legislation or local policy can also go a long way in ensuring compliance and avoiding any unexpected tax bills.
How to Avoid Paying Council Tax on an Empty Property
1. Use a Property Guardian
One of the most effective ways to avoid council tax on an empty property is by using a property guardian. A property guardian is someone who lives in the property temporarily to keep it secure and well-maintained. This not only helps in avoiding council tax but also keeps the property safer from vandals or burglars. According to Slothmove, using a property guardian can be a win-win situation for both the property owner and the guardian. The owner saves on council tax and maintenance costs, while the guardian gets to live in a property at a reduced rent.
2. Rent It Out
Another straightforward way to avoid paying council tax on an empty property is by renting it out. This will not only save you from paying the council tax but will also provide you with an additional source of income. The Lowe Group suggests that renting out your property can be a lucrative option, especially if it's located in a high-demand area.
3. Apply for a Council Tax Discount or Exemption
Your local council has the discretion to offer discounts on council tax for empty properties. Debitam mentions that you can apply for a council tax discount by contacting your local council. The amount of discount varies from council to council and is usually decided on a case-by-case basis. Some councils offer a 100% discount for the first month that the property is empty, followed by a 50% discount for the next five months.
4. Major Repair Work or Structural Changes
If your property is undergoing major repair work or structural changes, you may be eligible for a council tax discount. The UK government states that homes undergoing significant repair work, like rebuilding walls, may get a council tax discount. You'll need to contact your local council to find out if your property qualifies for this discount.
5. Utilize Legal Loopholes
While the term "loophole" may sound dubious, there are entirely legal ways to navigate the council tax system. For instance, if your property has been empty for two years or more, you can be charged an extra amount of Council Tax, known as a 'premium.' However, this premium does not apply if the empty property is an annex or if you're in the armed forces and have to move into armed forces accommodation as part of your work.
6. Probate and Inheritance
If you've inherited a property and are in the process of selling it, you're not required to pay council tax until after you get probate, as long as the property remains empty. According to the UK government, after probate is granted, you may be able to get a Council Tax exemption for another six months if the property is still unoccupied and remains in the name of the person who died.
7. Special Circumstances for Exemption
There are special circumstances under which your property may be exempt from council tax. These include properties of someone in prison (except for not paying a fine or Council Tax), someone who’s moved into a care home or hospital, properties that have been repossessed, or properties that cannot be lived in by law, for example, if they’re derelict.
8. Challenge Your Council Tax Band
If your property is considered derelict, it's possible to challenge your Council Tax band. The UK government states that a property is only considered derelict if it is not possible to live in it due to damage by weather, rot, or vandalism and would need major structural works to make it 'wind and watertight' again. If you think your property falls under this category, you can challenge your Council Tax band to potentially have it removed from the Council Tax valuation list.
9. Completion Notice for Refurbished Properties
If you've been carrying out major home improvements on an empty property or building a new one, your council will inform you when you have to start paying Council Tax. You'll get a 'completion notice' that tells you the date you must start paying Council Tax. This is crucial information to keep in mind if you're planning to renovate an empty property.
10. Consult a Tax Advisor
When in doubt, consult a tax advisor who specializes in property taxes. They can provide personalized advice tailored to your specific situation. Property Press Online suggests that a tax advisor can help you navigate the complexities of council tax laws and find the best strategy for your circumstances.
11. Utilize the "Job-Related Dwelling" Exemption
If you have to live in another property due to the nature of your job, your empty property may qualify for a "job-related dwelling" exemption. This is particularly relevant for members of the armed forces, clergy, or those whose employment contract requires them to reside elsewhere. To qualify, you'll need to provide evidence that your job mandates you to live in a different property. Once verified, your empty property could be exempt from council tax.
12. Apply for a "Major Repair Work or Structural Changes" Discount
If your property is empty because it's undergoing significant repair work or structural changes, you might be eligible for a council tax discount. The property must be uninhabitable during this period, and you'll need to provide evidence of the ongoing work, such as contractor invoices or building permits. The duration and amount of the discount can vary depending on your local council's policies, so it's crucial to check the specific rules in your area.
13. Transfer Ownership to a Non-Profit Organization
Another strategy to avoid council tax is to transfer the ownership of the empty property to a non-profit organization. Properties owned by charities are usually exempt from council tax if they are unoccupied and have been so for less than six months. However, this is a more drastic measure and should be considered carefully. It involves legal processes and could have implications for your financial and tax situation. Always consult a tax advisor or legal expert before taking such a significant step.
Additional Tips and Common Mistakes to Avoid
14. Be Proactive with Documentation
One of the key aspects of avoiding council tax on an empty property is to be proactive with your documentation. Keep all records of correspondence with your local council, any forms you've filled out, and any evidence that supports your claim for a discount or exemption. This will be invaluable if there are any disputes or if you need to appeal a council tax decision.
15. Short-term Rentals
If you're considering renting out your property on a short-term basis through platforms like Airbnb, be cautious. While this can be a good way to generate income and avoid council tax, some councils have specific rules about short-term rentals and council tax. Make sure to check the regulations in your local area before proceeding.
16. Don't Assume Exemptions
Never assume that your property is automatically exempt from council tax. Always check with your local council to confirm any discounts or exemptions you think you may be eligible for. Failing to do so could result in backdated charges and even legal action.
17. Keep an Eye on Timeframes
Council tax rules often have specific timeframes attached to them. For example, some exemptions only last for a certain period, after which you'll be liable for the full council tax amount. Make sure to keep track of these dates and reapply for discounts or exemptions as necessary.
18. Beware of Scams
Be cautious of any third-party companies that claim they can help you avoid council tax for a fee. Always verify the legitimacy of such services and consult with your local council or a trusted tax advisor before taking any action.
19. Double-check Your Council Tax Band
Mistakes can happen, and it's possible that your property could be in the wrong council tax band. If you believe this is the case, you can challenge it. However, be aware that this can be a double-edged sword; your council tax could either increase or decrease as a result.
20. Consult Multiple Sources
Don't rely solely on one source of information. The rules around council tax can be complex and subject to change. It's always a good idea to consult multiple sources, including your local council's website, government publications, and professional tax advisors.
21. Claim a Student Exemption
If a property is owned by students and is empty because they are away for studies, it may qualify for a student exemption. This is particularly useful for parents who have purchased properties for their children attending university. To qualify, you'll need to provide proof of student status, such as a university enrollment letter.
22. Utilize the "Annex" Exemption
If the empty property is an annex to another property where you live, you might be eligible for a 50% council tax discount. An annex is a separate living space that is part of a larger property, like a granny flat. To qualify, the annex must be used by the resident of the main property or be empty because it can't be rented out separately.
23. Apply for a "Bankruptcy" Exemption
Properties that are empty due to the owner's bankruptcy can be exempt from council tax. The trustee handling the bankruptcy will usually inform the local council, but it's a good idea to double-check and ensure that the exemption has been applied.
24. Register the Property as a Holiday Home
Some councils offer tax reductions for properties that are classified as holiday homes. The property must be furnished and available for rent for at least 140 days per year but must not be occupied for more than 155 days. The discount varies by council, so check your local council's policy to see if this option is viable for you.
25. Claim a "Severe Mental Impairment" Exemption
If the property is empty because the owner has moved to a care home or hospital due to severe mental impairment, the property may be exempt from council tax. A medical certification will be required, along with proof that the individual is receiving qualifying benefits.
Navigating the complexities of council tax on an empty property in the UK can be a daunting task. However, with the right strategies and information, you can significantly reduce or even completely avoid this financial burden. From understanding the basics of council tax and utilizing property guardians to exploring legal loopholes and consulting tax advisors, there are various avenues you can explore. Additionally, being proactive with documentation, understanding timeframes, and avoiding common mistakes can further safeguard you from unnecessary expenses. By taking a comprehensive approach and staying informed, you can make the most out of your property investment while minimizing your council tax obligations.
The Importance of Professional Help for Managing Council and Property Taxes
Navigating the Tax Maze
Council and property taxes in the UK can be a complex and often confusing landscape to navigate. With various bands, exemptions, and special circumstances to consider, the average property owner may find themselves overwhelmed. This complexity is further compounded by frequent legislative changes and local council policies that can affect your tax liability. In such a scenario, professional help becomes not just a convenience but a necessity.
One of the most significant advantages of seeking professional help is the tailored advice you receive. Tax professionals can provide personalized strategies based on your specific situation, whether you're a homeowner, a landlord, or an investor. This tailored approach is particularly beneficial for those with multiple properties or unique circumstances, such as probate properties or homes under renovation.
Mistakes in tax filing can lead to severe financial penalties and legal repercussions. Tax professionals are well-versed in the intricacies of UK tax laws and can help you avoid common pitfalls. They can ensure that you're not only paying what you owe but also taking advantage of any exemptions or discounts you're eligible for, thereby mitigating risks associated with non-compliance or errors.
Time and Effort Savings
Calculating your tax liability, keeping track of deadlines, and filling out the necessary paperwork can be time-consuming. Professional tax advisors take this burden off your shoulders, allowing you to focus on other important aspects of property management or your daily life. The time and effort saved can often outweigh the cost of hiring a professional, making it a wise investment.
Tax planning is not just about meeting your current obligations but also about strategizing for the future. A tax professional can help you plan your property investments in a tax-efficient manner. Whether you're considering buying additional properties, selling, or renting, a tax advisor can provide valuable insights into how each decision will impact your tax situation, both in the short term and long term.
Access to Updated Information
Tax laws and regulations are continually evolving. What was applicable last year might not be relevant today. Tax professionals stay updated with the latest changes in legislation, ensuring that you're always in compliance with current laws. This up-to-date knowledge is particularly crucial for those who own properties in different council areas, each with its own set of rules and rates.
If you find yourself in a dispute with the local council over your tax assessment, having a tax professional by your side can be invaluable. They can help you gather the necessary documentation, represent you in discussions with the council, and guide you through the appeals process if needed. Their expertise can often mean the difference between a favorable resolution and a costly mistake.
In a landscape as complex and ever-changing as that of council and property taxes in the UK, professional help is invaluable. From personalized advice and risk mitigation to strategic planning and dispute resolution, the benefits are manifold. While there is a cost involved in hiring a professional, the peace of mind, time saved, and potential financial savings often make it a worthwhile investment. Therefore, if you're a property owner in the UK, seeking professional help for managing your council and property taxes is not just advisable; it's essential.