New Council Tax bands could be created under plans unveiled by the Welsh Government

Households across Wales could see changes to how much they pay in Council Tax in Wales under new proposals unveiled today.

A consultation has been launched today by Welsh Labour as part of its Co-operation Agreement with Plaid Cymru.

It aims to modernise a system which the Welsh Government say is “20 years out of date”, with people “living in homes in the lowest council tax bands paying a relatively higher amount of council tax in relation to the value of their homes, than people who live in higher value homes.”

Currently there are nine Council Tax bands in Wales which raises around £2.4 billion a year which helps to fund services such as schools, local libraries, social care to street cleaning.

The new consultation includes different potential approaches designed to make the tax fairer, including adding new council tax bands, changing the tax-rates charged for each band, and reviewing discounts and reductions.

The Welsh Government states that any redesign aims to retain the current amount raised through Council Tax – not increase the amount.

Three changes are being consulted on, including:

Minimal reform

This would include a revaluation of properties to check they are up-to-date but keeping the current 9 bands and tax-rates, but the system would become more up-to-date and accurate under those rules.

About 8 out of 10 households would see bills reduced or experience minimal change.

Modest reform

A revaluation plus further reforms to the tax-rates charged for each band, to “spread council tax more fairly”. This would retain the nine existing bands but see an updating of property values

This means bills for households in lower band properties would fall, and bills for those in the highest band properties would rise.

According to Welsh Government data some properties would move up bands, some would move down bands, but most would stay in the same band.

About 7 out of 10 households would see bills reduced or experience minimal change.

Expanded reform

This would include a revaluation plus further reforms including additional tax bands and changes to the tax-rates.

This approach would see the number of bands increase from 9 to 12, adding 1 band at the bottom for the lowest value properties in Wales, and 2 more bands at the top, for the most expensive properties valued at over £1.2 million.

The Welsh Government claim that people living in the lowest value properties would see bills fall, and those in the most expensive properties would see bills rise.

Some properties would move up bands, some would move down bands, and most would stay in the same band, but those reductions would be greater, especially for those living in the lowest value properties

In parallel with this work, the Valuation Office Agency, is preparing to carry out a proposed revaluation of all 1.5 million homes in Wales to ensure valuations are up-to-date and in line with current property values.

The earliest date for any changes coming into effect is 1 April 2025. However, changes could be deferred until the next Senedd term, or introduced in stages.

Under Welsh Government plans, revaluations would happen every five years to ensure people are paying the right amount of council tax in relation to the value of their property.

Nearly half of households in Wales currently receive a discount or reduction on their council tax bill, through the numerous discounts and exemptions, and our national Council Tax Reduction Scheme. This will not change because of this work.

Minister for Finance and Local Government, Rebecca Evans, said: “We are asking people to help us shape the future of council tax in Wales. Achieving a fairer council tax will be one of the single most beneficial actions this government can take towards making Wales a more equal nation.

“The benefits will be felt in the pockets of many households.”

“This is not about raising more money from taxes and changes are not going to happen overnight. We see this very much as being a gradual process and that is why we are also asking for views on the pace of change.”

This work is being carried out in collaboration with Plaid Cymru, as a part of the Co-operation Agreement commitment between the Welsh Government and Plaid Cymru.

Plaid Cymru Designated Member Cefin Campbell said: “It is widely recognised that council tax is outdated and long overdue for reform.

“This consultation is asking for the views of people across Wales on what a council tax could look like in the future and how we can make it fairer.

“While change is needed, it will take time meaning bills will not change immediately.

“We are consulting not only on what needs to change, but when the changes could come into place.”

However the proposals have been criticised by the Welsh Conservatives, who have argued that families will be hit with higher bills.

Welsh Conservative Shadow Local Government Minister, Sam Rowlands MS said: “Since 1999 council tax in Wales has gone up by nearly 200%.

 “The Labour Government, in the typical spirit of wanting to make taxation more ‘progressive’, is stealthily planning on hiking up council tax for hard working people.

 “The last time a revaluation took place in Wales 1 in 3 families were hit with higher bills we can’t allow this to happen in the current cost of living challenge.

 “It’s vitally important that any council tax revaluation is fair and justified and doesn’t hit hard working people across Wales.”

You can take part in the Welsh Government consultation on Council Tax reforms, here.