Council tax - revaluation and reform: key findings summary

Key trade-offs when considering policy options

Taken together, our analysis suggests there are a number of important policy considerations and trade-offs to consider in relation to the revaluation and reform of council tax, and associated potential transitional and mitigation measures:

• Revaluation alone would address the fact that two properties worth the same today can face very different tax bills because they were worth different amounts in 1991. It would not, however, address the regressivity of the current system.
• Reducing tax rates on low-value properties and increasing them on high-value properties would reduce regressivity. We find that more households would see a reduction in bill than an increase (especially for low- and middle-income households). But some households (mainly higher-income ones) would see bigger increases in bills if one aimed to maintain overall revenues.
• Transitional relief could be used to phase in big increases in bills, but providing more relief and providing relief for a longer period would mean a more expensive scheme – requiring lower spending on other things or increases in overall tax rates.
• Mitigation measures could protect low-income households from increases in bills. A deferral scheme for the ‘cash-poor, asset-rich’ need not reduce revenues in the long term, but broader eligibility and higher take-up would mean councils’ borrowing more to cover the cost of deferral loans to households in the short term.

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