A Bills Special!

0:00BBC Sounds. Music, radio, podcasts. Hello, I'm Martin Lewis and this is the cunningly named The Martin Lewis Podcast. I do wonder what that's going to be about. Now, usually much of it comes from our BBC Radio 5 live show with Adrian Charles. And this one is extra special. Oh, yes, indeedy. Because I'm on a break, so it's a good excuse for a Best Bits pod. The producers have put together what they think are some of the most pertinent and still relevant elements of the podcast we've done so far this year. Let's just hope they're right. Though worth noting, if I do mention specific products, do be aware they could have changed, so double-check before you take any action.

0:42We don't want you listening to February's Best Buys once you're in August. And this week's Best Bits podcast is a bills buster. That's a lot of Bs in one sentence. I've got four easy, speedy steps to help you slash your mobile bill, and I'll go through everything you need to know about council tax. Play the theme tune.

1:14I'm delighted to be doing this update to the Council Tax podcast I recorded at the beginning of June because there's good news. I talked about a potential government consultation on the administration of Council Tax and my hopes for what would be in it. Well, Well, it came out today and most of my hopes have come to fruition. For me, parts of the council tax system are broken and I've called for some of these fixes for nearly 20 years. So it is a delight that the government has listened and rapidly launched this consultation, which includes many of the areas I've been talking to them about. And I can now tell you it was a few weeks before all of that podcast that I met with Angela Rayner and put these points to her.

1:56And I do believe that she did listen. So the first one and the biggest and the most important for me, council tax debt collection. It is rapid and aggressive and the collection methods currently hurt millions of people and disproportionately affect those with mental health problems. Here's how it works. You miss a monthly payment because you can't afford it. Within three weeks, the council can tell you you have to pay for the whole year. Within three weeks of you not doing that, they can go to court, get bailiffs, add charges on what you already owe and come in and take stuff from your house, which can be incredibly detrimental to people.

2:33No commercial lender would be allowed to behave like this. They are not allowed to behave like that. Constituents are treated worse than consumers. It's counterproductive. It can add to councils costs. And it still doesn't mean people can pay the money back. If they don't have the money, they don't have the money. The government is consulting on slowing the whole process down, adding in that councils must be considerate of people's circumstances, capping the extra costs, and as you have to do in consumer lending, pointing people towards getting help with their debts, which might just mean they're more able to repay the council.

3:10So I'm very delighted on that one. It's work that my charity, the Money and Mental Health Policy Institute, has long been campaigning on, and we've been doing it for a good amount of time and it's brilliant to see that things might actually improve and people's lives could change so do feed into that one next as i talk about in the pod you're about to hear council tax bans in england and scotland haven't been revalued since the stop gap drive-by valuations first done back in 1991 now rebanding is not in the scope of this this is about council tax administration but the point i've made to them that i'm delighted is in the consultation is with potentially 400 ,000 homes in the wrong band.

3:51If people think they are wrongly in too high a band, they should be able to challenge it. Now, there is a blocker in place that says once you've been in a property more than six months, it gets much, much more difficult to challenge. But I don't think people know enough about the system to be checking within the first six months. So what I'm suggesting is everyone is allowed one formal challenge once they've moved into a property with no time limit. It's worth noting all of this consultation is about England but often when the changes come in England they do sometimes roll out to Scotland and Wales too.

4:25The consultation is also proposing help for some of the most vulnerable. Another one of those campaigns you'll have heard me say before that severe mental impairment discount is horribly named. It's a discount that is potentially there for people who've had dementia, Alzheimer's, severe stroke, severe Parkinson's and are no longer able to function socially in the way that they could. The problem is it's been under-publicised, under-claimed and over-complex. It's far too difficult to do. There are different systems with different councils. Sometimes you need a doctor to sign the form and you need to go to the doctor.

5:01Other times the council sends a form to the doctor. The backdating is inconsistent and in this consultation there is an opportunity to move towards a simpler, more universal, less off-putting application process. So they were my three main ones, but there are some other things in the consultation I should tell you about too. They're talking about changing the default that you will pay council tax every month. So 12 monthly payments instead of the current system, which is the default is you pay for the first 10 months of the tax year, and then you have a couple of months whether you don't pay. Now, the reason that's done is so councils can bring money in more quickly.

5:41But the government's saying it doesn't make any sense. And of course, it's right. You wouldn't invent that system to begin with. Now, when I was first told about this, my point was, I think it's right that you shift the default to 12 week to 12 monthly payments. But there are some people who like the 10 monthly payment system because they use it for budgeting. And when they have those couple of almost payment holidays from council tax, that's what it feels like, though it isn't, you're still paying the same amount, that they put that money to other things like car insurance. So while the default will be shifted, to 12 monthly payments.

6:10Those people who want to stick with 10 monthly payments are still able to do so. You just have to request it and you can be on the current system. They're also looking at potentially upgrading the eligibility for carers and apprenticeships because the amount that you're allowed to learn to count, there's a limit and that hasn't gone up with the minimum wage. That's a pretty simple one. Let's go through the checks then. Okay, so we'll do the checks before the challenges. The first check is very simple. It's the neighbours' check. Is your band higher than neighbours in preferably identical, if not in similar homes?

6:49Now, you don't need to ask them. You can simply check your band and your neighbours' bands at gov.uk in England and saa.gov.uk in Scotland. You find out what the bands are and you can talk to the neighbours about their property. I need to just... The checks that I'm doing here, these are the checks to see if it's then worth doing much more investigation in the challenge. These are the spot checks, if you like, to see if it's likely to be worthwhile. These are not your formal. So the first check is the neighbour's check. Make sense? OK. Richard is already sort of worried, say, challenge the ban.

7:22If it goes up instead of down, do you have to pay more? Absolutely. You cannot request that your ban is lowered. You can simply ask them to reassess your banning. Now, let's just be plain. The problem with the neighbours' check is this. If you are in a higher band than neighbours in identical properties, it may be that they are all in to lower band and you are in the right band. And what you don't want to do is, A, do an appeal and find your band goes up. Or worse, you get in touch with this and they put all your neighbours' bands up. As long as they don't tell the neighbours why they're doing it.

7:56Oh, it all comes out and it's happened. And this is because people do this speculatively without doing the proper checks. Now, when I invented this system back in 2007, of course, I mean, I didn't invent council tax challenging, but I tried to formulise how you do it. I came up with this second check. And the second check is called the valuation check. Now, it's very important for me to say when you go on to the challenge later, the valuation check is not evidential. You cannot use it in the challenge. They won't look at it. This is just my second check that gives you. To inform your decision.

8:25To inform your decision of whether it's likely you're in too higher band or your neighbours are in too lower band. And I would absolutely not go any further unless you pass both cheques. And I have never heard of, I can't say it didn't happen, but I've had tens of thousands of successes on this, I suspect, that type of scale. I've never heard of anyone having their band up if they'd passed both cheques. So the second cheque is the valuation cheque, which is effectively, what was your house worth in 1991? That's because the bands were still in, not only were they last valued in 1991, but they're still based on 1991 prices.

9:02So, for example, in England, a band A is under 40 grand, a band B is 40 to 52 ,000, a band C is 52 ,000 to 68, a band D is 68 to 88 ,000, a band E, 88 ,000 to 120 grand, a band F, 120 grand to 160, a band G, 160 ,000 to 320 ,000, and a band H over 320 ,000. Well, 320 ,000 isn't that big a house price anymore. So, you know, if it were on today's prices, everyone, you know, half the country would be in band H. So what do you do? Well, if you bought your house in or after 1991, take the price and sale date, if it's earlier, take the price and sale date, and then you need to back calculate the value in 1991 prices, which people can work out where, as I've been doing this, there are free tools on the internet that will do this for you, Adrian.

9:49That's all I can say. There are free tools that will do this for you. If you bought your house before 1991, it gets trickier. And let me say right now, the system is imperfect. I do not have answers for everything. We're trying to battle an antiquated valuation system based on antiquated data. But what you would do is you'd find a property that was identical or similar to yours, find out what year it sold on Zoopla and Rightmove and what the prices are, and you'd back calculate that. So if both checks, your neighbours checks, you're in too high a band and it looks like that you are still in too high a band in 1991 prices when you back calculate what your house was worth in 1991, then I think it's safe to move on to looking at challenging it.

10:32OK. So Martin says we've discovered that our leasehold house was first sold new in 1997 for less than its council tax band valuation adjusted for inflation between 1991 and 1997, which would have put it in a lower band. If we challenge the valuation obviously corrected, are we likely to get a band reduction? Irrelevant. Everything you've told me is irrelevant because valuations in that sense are not what the valuation office agency looked at. What they're looking at is, are you wrong compared to similar properties and identical properties? The neighbour's cheque is the more important one. You've got this giving me the secondary cheque.

11:05If you're also saying all my neighbours are in a lower band than me and they're in similar or identical properties, then yes, what you're telling me is important. Otherwise, valuation is not evidential. And Adrian says, how do we go about challenging the band we are in when there are no identical houses in our street? It's really difficult. And in fact, let me go through the technicals of the challenge now, which will answer that question. OK, so when you challenge, you step one is to submit a formal or if you have to in an informal review process. Formal is better. It is a set process, but it's available to far fewer people because for a formal process, you must have moved in the property within the last six months, which I think we've probably got a question on that.

11:52Oh, yes. I've challenged my counter-stress band this year as of March 25, and they have said that because it has been more than six months since I moved in, I can't challenge it. Right. Well, the big question here is where are you? So, England and Wales, there is a formal and an informal process. Scotland, there is only a formal process. If you've moved into your house in Scotland over six months ago and you think you're in the wrong band, I would say it is nearly impossible to challenge it. I spoke to the head of the Scottish Assessors Association about it when I did a show on it in the past, and she says, we won't say it's impossible, but there has to be some serious error.

12:31Now, one of the arguments that you can use here is the council tax office have to, by statute, to maintain the integrity of the list. So if you believe you're the fundamental error of your council tax banding, you can challenge them on that they're not administratively doing their job properly. But it's really, really hard. And it's not for people who can't grit their teeth and focus on something. You know, it's going to be a big job. So let's go to the formal challenge. In general, you must have lived in the property for six months or less. Renters can do this as well as people who own. But if you're a renter, courtesy would indicate tell your landlord before you do that.

13:03You may also be able to formally challenge if the property has fundamentally changed. For example, it's changed from a house into flats or its use has changed. For example, some of it is now being used for a business or the local area has changed. For example, a nightclub's been built next door and it's fundamentally not the value. In Scotland, you may also be able to challenge formally if there has been a material significant drop in property prices where you are. but that is Scotland only. So technically no evidence is needed in a formal challenge, but I would do the evidence I'm going to talk about.

13:41The informal challenge is for those people who say you can't challenge because you've lived there too long, which is exactly like that question you just had. And this is all about the VOA having a legal duty to uphold the integrity of the council tax lists. But to do an informal challenge, you must provide compelling evidence that you are in the wrong band. So you can see what we're talking about here is the criteria for the challenge is different. If it's a formal challenge, you can say to them, I think I'm in the wrong band. Can you have a look at it? And here's why. If it's an informal challenge, it's hardcore preparation to get in and really push your case in England and Scotland that there's compelling evidence, not that you're on the border of being in the wrong band, but you are manifestly in the wrong band.

14:27Right. Okay. Okay. So if you can do informal or formal, which should you go for? Always do formal, if you're able to do formal. Informal is for those who can't do formal. So always do formal first. Now, when it comes to challenging, again, in England and Wales, there's a brilliant thing that you need to get. And it's called, and people don't know about this, It's called your property attribute details that is held by the valuation office agency. So the way you get this, I'm sorry, it's convoluted. You go to gov.uk. You go to the contact VOA, valuation office agency page. You select council tax.

15:10Then you select other. Then you type in request my pad, P-A-D. Alternatively, you can call the VOA, but their phone lines will be busy. 0300 501 501. 0-3-0-0-0-5-0-1-5-0-1. They'll normally come within five days, but this and the podcast will probably mean it last longer. So this is... Now, everybody, even though you can't get a pad in Scotland, you need to understand what's on your pad because this is what they're looking at when they're establishing are you in the right band and comparing you to other properties. Let me talk through what's on your property attribute details now. The property type.

15:45Is it end of terrace or semi-detached? The property age. Is it Victorian or post-war? The number of floors. The number of bedrooms. that includes bedrooms not currently being used as bedrooms so if you've turned a bedroom into a home office that's a bedroom the number of bathrooms though that excludes toilets with only a sink it's got to be a proper bathroom not just a loo the number of rooms the living room dining room study exclude conservatories the utility room and kitchens and the floor area the size of the property measured in square meters so many people who go through once you're in the challenge phase they are on their hands and knees measuring floor property or they're using the floor property measure they got when they bought to see if it matches up to your pad.

16:26All of those things, once you've got your pad, is go through it line by line, because if it's incorrect, that may be strength towards the rear band. But if it was only done on the basis of a drive-by valuation, how could the pad possibly be accurate? Well, the valuation of your band was a drive-by valuation, but the pad details were stored, and it was the interrelation between the two, which is how the valuation was done. Yeah, but that doesn't, you know, these things aren't necessarily right. But it's always worth going through that. And the reason it's worth going through that is what you then have to do, the next step is, you know, this isn't easy to do, but we're talking tens of thousands of pounds for people, is identify similar or identical properties in the lower band.

17:08So you did that for my checks. Now that was your, should I be looking at this? Should I be doing further work? Now we're in the... So what do you do? Go round your neighbour's house with a tape measure? Say, can I measure your toilet? Best if you can, or if not, find their sales data and the floor plans that are available when they were sold on the property prices near you. You're looking for same street or estate. That's really important. That helps, although in very rural areas, because you have to submit these. You have to submit the identical properties you are arguing are in a lower band than yours.

17:40In rural areas, it will accept up to 10 miles difference. But if you're in a city, you're looking at same street estate, same style or features. You can't compare a semi to a flat. Similar age, you can't compare a new bill to pre-1900s. Similar size, usually within a maximum 10 % difference, but closer is better. To find those, speak to other occupiers or try property sales site, or if needed, you can go to the land registry for a small fee, which has records of other properties. And then, I'm nearly there, sorry everyone, then you submit your challenge. In England, it's gov.uk, challenge your council tax band.

18:15You can phone or email or write to the VOA. In Scotland, it's saa.gov.uk, make a proposal. Include a description of your property and any disagreement with the pad. If you think the pad is wrong, that's very important. Plus, addresses, descriptions, evidence of lower-banded homes. There are free templates available online. The outcomes, success, woo-hoo, backdated. Formal rejection, you can appeal within time limits. Informal rejection, that's probably it, unless you find new data that has a substantial change in it. That is the Check and Challenge.

18:54Caroline in Birmingham. I just found my counsel this morning after several phone calls, emails about my mum's counsel tax, which you received a court summons for non-payment from when she died. It's been a nightmare and distress. I had to contact my MP. This needs investigating because she was charged from the day she died. It turns out she was in credit. it. Council tax debt collection is a nightmare system. When you talk to the debt counselling agencies, they talk about commercial lenders, but the one that they save the shake of their head is council tax. It is more vicious, more aggressive and more rapid than any other form of mainstream debt collection in the UK.

19:36That's why I cried a little bit when I got the win that they're going to consult on changing the way it works. Millions of people's lives are destroyed. The fact that you can't pay a month and you then have to pay a year and you have bailiffs to your door. The story that got me involved in this is through my charity, Money and Mental Health Policy Institute, of the woman who got her council tax demand for a mispayment because of delays in the post on Christmas Eve and she had to pay a year's worth by Christmas Day or the bailiffs were coming round. This is a woman with severe mental health problems who was turned into total anxiety, who therefore got a credit card out to pay it.

20:15She took out a new credit card at a 40 % interest rate that she could never afford to pay, and it absolutely catastrophised and destroyed her finances. Constituents treated worse than customers, and that's why I've been campaigning to change, and that's just another symptom of it. And I hope this consultation, I hope, will come out in the next month. I haven't got a date for it. I'm hoping it'll be in the next month. And they've told me it will include changes to getting, you know, Just reducing the rapid and aggressive debt collection, which I should note doesn't mean councils bring in more money.

20:45Telling people to pay money they haven't got just means it adds cost to the individual, cost to the council and cost to the NHS because of the mental health impact that it has on so many people. So it isn't a clever system for anyone. And I'm very pleased and I'm thankful to the government for saying they'll look at it. Discounts. Who gets them? OK, so I'm afraid again, and I'm sorry if this programme is being complicated, folks, but it is complicated. It's not me who does the system. These are discounts. What everybody needs to understand is the full council tax bill is based on two or more qualifying adults living in the property.

21:21If you are not in that situation, you may be due a discount. An adult is simply somebody aged 18 or older. There are four categories of discount, but they interact in relatively complicated ways. So let me give you the categories first. Somebody aged under 18, a minor. We're going to call them a minor from now on. A full time student on a minimum one year course. We're going to call them students, but they're a full time student. somebody with a severe mental impairment this is the one that is commonly missed out and that i'm campaigning to get better clarification on it a severe mental impairment is desire is currently defined as an impairment of intelligence and social functioning which appears to be permanent it is common with alzheimer's dementia severe strokes severe parkinson's to qualify as having a severe mental impairment.

22:15You need to have had a doctor certified that you have an SMI. Councils have different forms. I want to standardise the forms. It makes it too complicated. You'll need to get the doctor to sign the form. And you will need to be getting one of a number of benefits like attendance allowance, disability, living allowance, personal independence payments. Some of those are non-means-tested benefits. So it isn't necessarily about means-tested going through in it. In England and Wales, you will need to be getting that benefit. In Scotland, you can just be eligible for the benefit even if you're not getting it.

22:47But if you're eligible and not getting it, you should be getting it, is what I'd also say. So we've now got three categories, minors, students, SMI, severe mental impairments. Fourth category, this is a different one, is living carers. So that's someone who is caring over 35 hours a week of care, not for your spouse or partner or a child under the age of 18. Right. So you've got those four categories. If there are two qualifying adults living in the house, even if they're living with a host of people who are discounted for council tax, minors, students, SMI, you pay 100 % because there are two adults.

23:26So the two adults always override everything else. If there is one adult living in the house with somebody who is discounted, severe mental impairment, student, minor, or a carer, you get a 25 % reduction. So that's the single adult discount. A single adult gets a 25 % reduction and you still get that even if you're living with someone who is discounted for council tax purposes, which are the categories I mentioned earlier. If everybody in the household is discounted, so let's say an all-student household or perhaps two people who both have a severe mental impairment, you do not pay council tax.

24:04And then the one slightly hybrid category, if somebody with a severe mental impairment is living with a carer and no other adults, you get a 50 % discount. So those are the discounts. So what you need to be looking at is you see the complicated interrelation. But the thing that always trumps that that people need to understand is two adults, you pay the full amount. Even if you're living with 12 under 18s and four students, you pay the full amount because it's about the number of qualifying adults in the house that goes for it. Now, if you're suddenly listening to that and going, hold on, I didn't think I was entitled to the single person discount because I live with my kids or I live with my son who's a student and he's 19.

24:42So I didn't think I would get it. You do get it. Get in touch with them. Whether you will get it backdated to the moment that it happened to you is counsel by counsel. for severe mental impairment in Wales, because they listened to the campaign asks, and I was very pleased and they credited us with this. They have standardised information and standardised backdating for severe mental impairments cases. So people get big backdated payouts on severe mental impairment. Reduction, then. There is council tax support worth up to£1 ,500 a year missed out by possibly two and a quarter million people. the reduction is those primarily for those on lower incomes and in some cases it can cut your council tax bill by up to 100 % now you can do both the discount that we've talked about and a reduction that's why I'm categorising them separately the reductions often apply to people who are on universal credits and means tested benefits or pension credit but this is the thing I need to shout and this is the reason I believe why two and a quarter potentially two and a quarter, those aren't government stats, those are stats for an agency I work with, potentially two and a quarter people are missing out.