There are some things in life that seem so far outside of our control we just don’t challenge them.

Council tax is without a doubt one of these things. Every year, a bill arrives through the letterbox, we take a look, grumble a bit, but unless our finances are dire, we tend not to question it too much. After all – what can you do?

Actually, it turns out the answer is: quite a bit.

According to a recent investigation by MoneySavingExpert, a whopping 862,000 people are owed a council tax refund after overpaying – that’s an estimated £150 million. Yes, you read that right.

For many people this will be a surprising statistic, given that most of us think it’s not that easy to overpay council tax. So what’s going on, are you entitled to make a claim and how do you get started? Here’s my guide.

How do council tax overpayments occur?

Most people won’t think that they’ve overpaid on their council tax. But the reality is millions of pounds in overpayments are sat around waiting to be claimed back.

There are two basic types of overpayments. Small amounts where people have paid upfront and big amounts when you are in the wrong ‘band’ – the estimate your council makes about the value of your property.

Small overpayments

Most people pay council tax each month in advance and spread the cost over 10 months, which means those who pay this way regularly will be in credit. The problem comes when you move to a new council area. That payment in advance isn’t necessarily returned back to you ‘pro rata’ based on the date you moved out. In addition, some people forget to cancel their direct debit. You might also have been entitled to a discount that you didn’t realise at the time.

These claims are relatively easy to make. Just go through your council’s website (type in the council’s name and ‘council tax refund’) and go through their online form. You’ll need your council tax account number from a bill.

Refunds when you are in the wrong housing band

Small overpayments are the most common form of overpayment but tend not to be for too much money. However, thousands of people have discovered they are entitled to a much larger refund. This sometimes comes to light when the people who move in your property after you move apply to get the home rebanded (so the property moves in a cheaper band). When this happens, technically you have been overpaying for years – which means you could be entitled to a significant refund.

And get ready for this! If you’ve moved out of the council catchment area in the last three decades – they you might be able to claim.

Now you might say, why haven’t I been given this money back already if the council know I was paying the wrong amount? And you’d be right! I think it’s outrageous that some councils are sitting on this cash knowing full well that they have overcharged you in the past. But the moral of the tale here is don’t expect a rebanding refund. You have to put the work in yourself.

Before you start spending, most people are likely to find that they are in the correct housing band. But if you have been overpaying then the refund amounts can be impressive. One reader contacted me to say that they’d been in the wrong band for decades and got a massive £7,000 refund plus a hefty reduction in their monthly bill too.

How do I know if my council tax band is/was incorrect?

Nothing is ever easy! You’ll need to do a bit of research. First of all, get to know the bands and what they cover:

Appealing mistakes over council tax bands comes down to finding similar nearby properties and seeing if they are in a different (cheaper) band. You can compare postcodes through the links above.

This is where things get interesting… Your council tax band is based on what the council thought the property was worth on:

  • 1 April 1991, for England and Scotland
  • 1 April 2003, for Wales

This might seem a bit bonkers but the fact of the matter is when council tax was introduced, there wasn’t much time to do a detailed assessment of the value of each property in your local area. So a rather sweeping assessment was made and considerable generalisations were made – some properties were priced up by the road, for example – so mistakes did happen. Therefore, this potentially means that if you live in England or Scotland and you’ve been in your property since before 01 April 1991 – and the band your council guesstimate is too expensive – you could be entitled to a refund of the difference of for the entire period you lived in the property. And as our reader found, this could be thousands of pounds.

Now… a word of warning. It’s been reported in the past that some people have rather optimistically put in claims after investigating and finding out that the people living nearby were paying lower amounts. However, if it turns out that they’ve all been paying a lower amount, everyone could be raised to the more expensive band. This will undoubtedly make you very, very unpopular. With permission, I checked a friend’s postcode as part of my research in to this article and I found that in his block of flats around 5% of tenants are paying a higher amount than the rest. If the ones in the higher band are paying the right amount and put in a claim, the other 95% could end up paying more. Yikes.

Oh and if your home was built after the dates above, then your new property is valued at… what it would have been worth back in 1991 or 2003. Which makes trying to figure out if the correct banding of your property is correct very difficult indeed.

You can always ask your council about how they’ve worked out the banding in your street or around your property as a casual enquiry – but that might pique their interest!

Other things to factor in

Remember that changes to your property can push it in to a new council tax band too. So if you’ve gone for some major renovations, beware – you might be expected to pay more.

However, there are other factors that can reduce your council tax band. The website give the following examples:

  • If your property has changed – for example, it’s been demolished, split into multiple properties or merged into one
  • If your property’s use has changed – for example, part of your property is now used for business
  • If your local area has changed physically – for example, a new supermarket has been built

How do I make a claim?

You’ll need to appeal the band through the or links in this article. It’s pretty easy to do, but you’ll need to bring some evidence to the table.

If your property has reduced in value then you’ll need to provide proof to that effect. However, if you think there’s been a mistake in the value of your property, then you’ll need to provide your research in to at least 5 similar addresses near you that are in a lower band. These should be roughly the same size (inc. bedrooms), type (detached, semi-detached, bungalow, etc.), age and style or design

Not all streets are the same, so you can also use the sale price of your home or nearby properties. The official guidance says the sales must be between:

  • 1 April 1989 and 31 March 1993 – if your property is in England
  • 1 April 2001 and 31 March 2005 – if your property is in Wales

This is dead easy – just click this link. There are also loads of free websites online with loads of historic prices.

What if I get turned down?

If you are living in England or Wales then you can appeal decisions to the Valuation Office Agency (VOA) here. In Scotland there’s an extra step to go through – you appeal to the local assessor first, after which the dispute is referred to the VOA too.

Watch out for scammers and blaggers

As with everything these days, there are loads of companies out there in internet land who will offer to get your cash back for a fee, or are outright cons. Don’t pay fees or cash up front when you can do all this yourself for free!

Featured in Times Money Mentor – Martyn James

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