Who Pays the Council Tax on a Rental Property?

PHS Team

24 Feb, 2025

The council tax bill will probably need to be paid by the tenant. The person who lives in the residence alone and is at least 18 years old is responsible for paying the taxes.

For most renters in the UK, paying Council Tax becomes a regular part of their household budgeting. Usually, as the occupant of the property, you're the one responsible for covering this bill.

However, it's not always that simple. There are specific situations where the responsibility shifts to the landlord, particularly in shared living arrangements like HMOs (Houses in Multiple Occupations).

Understanding who is responsible is necessary to avoid disputes and ensure timely payments. This blog post will explore the rules, exceptions, and practical steps for tenants and landlords to navigate the world of Council Tax. 

What is Council Tax and Why Does it Matter?

Council Tax is a local tax that every household in the UK pays to their council or local government. The money raised through Council Tax is used to pay for a wide range of necessary services that directly impact your daily life.

Council Tax pays for everything from schools and libraries to road maintenance, waste management, social care, parks and recreational facilities, and even the police and fire services. It's what keeps your local area running smoothly and providing the services you rely on.

Furthermore, not paying your Council Tax can lead to serious consequences, including fines and even legal action.

Therefore, Council Tax is more than just a bill, it's an important contribution to your local community, ensuring the provision of necessary services that benefit everyone. Understanding its purpose highlights the importance of paying it correctly and on time.

Tenant Responsibility for Council Tax

Generally, as a tenant, you're responsible for paying council tax on your rented property. This is usually stated in your tenancy agreement, and not paying can lead to legal trouble.

The General Rule: Tenants Pay

• Your name should be on the council tax bill.
• You are responsible for council tax from the day you move in.
• If you share the property with other tenants, you are all jointly responsible for the full council tax bill.
• You might be eligible for discounts or exemptions based on your situation (student status, disability, low income, etc.). Contact your local council to check.
• Inform the local council about your tenancy and provide the necessary details for accurate billing.

Exceptions: When the Landlord Pays

• If your property is an HMO, the landlord is usually responsible for council tax.
• If the property is empty and unfurnished, the landlord may be responsible.
• If the property is solely occupied by students, it may be exempt from council tax.
• If you are a diplomat or a member of a visiting armed force, you may be exempt.
• If you are a live-in care worker providing care to the landlord or their family, the landlord might be responsible.

Obligations as a Tenant

• Pay your council tax accurately to avoid penalties or legal action.
• Tell the local council if your circumstances change, as this could affect your bill or eligibility for discounts.
• Keep records of your council tax payments and receipts.
• Talk to your landlord about any council tax issues or disputes.
• Be aware of the council tax rates and any potential changes in your area.

It's important to understand your council tax responsibilities. Failure to pay can lead to court summons, fines, or even eviction. Be proactive, communicate with the council and your landlord, and ensure you meet your obligations.

Responsibility of Landlord

While tenants generally pay council tax, landlords are responsible in the following situations:

Houses in Multiple Occupations (HMOs)

• An HMO is a property rented by at least three tenants who aren't from the same family.
• The landlord, not the tenants, is responsible for council tax in HMOs. This applies even if tenants have separate agreements.
• The landlord can include the council tax cost in the rent.
• Failing to pay council tax on an HMO can result in fines and legal issues for the landlord.
• For council tax purposes, an HMO is a property built or adapted for occupation by people who do not constitute a single household or is inhabited by a person who has a license to occupy only part of the dwelling.

Vacant Properties

• The landlord pays council tax when the property is vacant. This applies between tenancies or during renovations.
• Some councils offer discounts or exemptions for vacant properties, but the landlord must apply.
• Landlords should inform the council when the property becomes vacant and when a new tenant moves in.
• Failure to pay council tax on a vacant property can lead to fines.

Student Properties

• If a property is only occupied by full-time students, the property is exempt from council tax. However, this requires that all tenants qualify.
• If there is a mix of students and non-students, the students are disregarded, and the non-students are billed.

Other Considerations

• Landlords are responsible for council tax liability between tenanted lets.
• Responsibility is determined by a hierarchy, starting with the tenant and ending with the landlord.
• If individual rooms are left to several people with separate tenancy agreements, the property will be classed as an HMO, and the landlord will need to pay council tax.

Landlords need to be aware of these situations and communicate with tenants and the local council regarding council tax responsibilities. Seeking professional advice can also help ensure compliance with local regulations.

How Council Tax is Calculated 

Council Tax isn't a one-size-fits-all charge, it's calculated based on a few key factors. The most important is your property's Council Tax band. Properties are assigned a band from A to H by the Valuation Office Agency (VOA), with Band A being the lowest and Band H the highest. 

You can easily check your property's band on the government's website or your local council's website.

Beyond the band, several other things can influence the amount you pay. These include any discounts you're eligible for and any changes to your local council's budget.

Paying over 12 months means smaller monthly payments, which can be easier on your budget. The bill will detail your payment options, including direct debit, online payments, and sometimes even paying at your local post office.

A Guide for Paying Council Tax as a Tenant

You're the tenant, and you're responsible for Council Tax. Here's how to handle it:

• Registering with Your Local Authority:

First,  As soon as you move into your new rental, contact your local council. Don't delay, you're responsible from the moment you move in.

Most councils allow you to register online through their website. Search for "Council Tax" on the council's website. Alternatively, you can call them directly.

• Information Needed: 
  • Your name(s) and date(s) of birth.
  • The full address of the rental property.
  • The date your tenancy started.
  • Your landlord's name and contact information (sometimes required)

• Payment Methods and Setting Up Payments:

Once registered, you'll receive a council tax bill outlining the amount due and payment options. The most common payment methods include:

• Direct Debit: This is often the easiest and most convenient way to pay, as the council automatically collects the amount from your bank account each month.
• Online Payment: Most councils offer online payment portals where you can pay using a debit or credit card.
• Phone Payment: Some councils allow you to pay over the phone using a debit or credit card.
• In-Person Payment: You can pay at the post office or a PayPoint outlet.

Setting up payments is usually straightforward, whether you choose direct debit or another method, so you can manage your council tax efficiently.

By following these steps, you'll be able to register and pay your Council Tax without any issues.

Council Tax Exemptions and Discounts

Council Tax can be an important expense. Here's a breakdown of some common ways to save:

• Full-time Students: If everyone in your rental property is a full-time student, you're likely exempt from Council Tax.
• Care Leavers: Individuals under a certain age (usually 25) who've recently left local authority care might also be exempt.
• Severe Mental Impairment: If someone in the household has a severe mental impairment (certified by a doctor), the property might be exempt. 
• Empty Properties: If the property is unoccupied, it might qualify for a discount or exemption, especially if it's undergoing major renovations or is actively being marketed for sale or rent.
• Single Person Discount: If you are the only adult (18+) living in the property you will receive 25% discount on the total council tax bill.

Important Note: Exemptions aren't automatic. You usually need to apply and provide evidence to your local council. Contact your council's tax department to find out about the criteria and the process.

Tips for landlords and tenants

Here are some tips for landlords and tenants to navigate council tax responsibilities smoothly:

Tips for Landlords:

• Clearly Define Responsibilities: Explicitly state in the tenancy agreement who is responsible for paying council tax to avoid misunderstandings.
• Stay Updated: Keep informed about any changes to council tax rules and regulations that may affect your rental properties.
• Provide Accurate Information: Ensure you provide correct property details, such as the number of bedrooms and occupancy status, to the local council for accurate calculation of council tax.
• Notify the Council accurately: Inform the local council accurately if the property becomes vacant or undergoes any changes that may affect council tax liability to avoid penalties.
• Keep Records: Maintain accurate records of council tax payments, exemptions, or discounts applied to your rental properties for tax purposes and in case of disputes.
• Claim Exemptions and Discounts: Familiarise yourself with available council tax exemptions and discounts for rental properties, such as those for vacant periods or properties undergoing renovations.
• Consider Council Tax in Rent: If you plan to include council tax in the rent, clearly communicate this to potential tenants and adjust the rent accordingly.
• Inform the Council of Tenancy Changes: Landlords should inform the local authority in writing when the tenancy starts and ends.

Tips for Tenants:

• Understand Your Responsibilities: Carefully read the tenancy agreement and clarify who is responsible for paying council tax.
• Obtain a Council Tax Bill: If you are responsible for council tax, ensure that you receive a council tax bill from the local authority. 
• Pay on Time: To prevent late fees or legal action, pay your council tax invoices on time.
• Check for Discounts and Exemptions: You might qualify for council tax exemptions or discounts based on your unique situation.
• Notify the Council of Changes: To ensure that your council tax liability is modified appropriately, notify the local council as soon as your living situation changes, such as when a new tenant moves in or out.
• Keep Proof of Payments: Keep track of your council tax payments, including bank statements and receipts, in case you have any disagreements with the local government or your landlord.
• Communicate with Your Landlord: To settle any problems or worries you may have about council tax, get in touch with your landlord right away.
• Contact the Council: If you think that you have received a council tax bill that you are not responsible for, contact the council.

Frequently asked questions

What happens if I don't pay my Council Tax?

Unpaid Council Tax can lead to court action and potential debt collection. Contact the council immediately if you're struggling to pay to discuss payment options.

What happens if I get a Council Tax discount by mistake?

You must contact your local council, or you could get a fine and have to pay back the discount.

I'm under 18. Do I have to pay Council Tax?

No, you are disregarded for Council Tax purposes if you are under 18.

What does my Council Tax pay for?

Libraries, Parks, open spaces and galleries. Leisure facilities, including swimming pools and recreation centres. Social care for older people, children and other vulnerable community members.

If you need help with Council Tax as a student or a homeowner, PHS Associates can assist with financial planning. They offer expertise in accounting, taxation, and business management. 

While full-time students may be exempt from Council Tax, We can help navigate the complexities and ensure compliance with local regulations. We can also provide advice on potential Council Tax Reduction schemes. Contact us at 0208 8611685 and email info@phs-uk.co.uk for a consultation to discuss your specific needs.