Martin Lewis issues council tax warning as 400,000 households could be owed refund

Martin Lewis has highlighted that an estimated 400,000 households could be due a council tax refund due to incorrect property banding. On his ITV Money Show, the Money Saving Expert founder revealed this startling figure and explained that the issue stems from the hasty setup of council tax in 1991 as a quick replacement for the poll tax.

The Government at the time used a "stop-gap valuation" method to determine council tax bands. Mr. Lewis shared a segment from his 2007 Money Show where he spoke with an estate agent involved in these initial valuations, reports the Express.

The estate agent recounted: "We were given a list of around 300 to 400 properties at the start of the week. We were given a list on Monday morning. We had to produce the valuations by Friday afternoon and, because of the pressures of other work, because this was something that we were doing as an additional contract, we'd probably do all of those valuations in one day. We were in the car carrying out all the valuations at all times."

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This rushed process suggests that many homes may have been incorrectly placed in higher tax bands, leading to potential overpayments. .

Martin Lewis stated: "Staggering, isn't it? That was a stop-gap valuation - It was only meant to last a few years. When I did that programme in 2007, it was already outrageous that it was 16 years old. In England and Scotland, it has still not been redone."

He stressed: "33 years since a stopgap temporary valuation. That is why 400,000 homes, it's thought, are in the wrong band. Many are in too high a band."

Mr Lewis pointed out that in Wales, a full revaluation was conducted in 2003, making it less likely for homes to be in the wrong band. He advised those who suspect they might be due a refund to perform a few checks, starting with the "The first check you do is the neighbours check. Is your band higher than neighbours in identical, preferably, if not similar, homes?"

He explained: "The first check you do is the neighbours check. Is your band higher than neighbours in identical, preferably, if not similar, homes? You don't need to ask them because it could be a bit embarrassing. You can simply go on to check your band at GOV.UK for England and Wales and Scottish Assessors Association website in Scotland.

"If it looks like you're in a higher band than many of your neighbours in similar homes... then this is your safety check."

He then discussed the "valuation check". Martin Lewis has advised individuals to research the 1991 value of their properties, as these prices continue to determine current council tax bands.

During his explanation, he said: "It is still those 1991 prices that dictate what band you are in. So if you bought your house after 1991, it's quite easy. You just find the price and the sale date. If it was earlier than that, then you go onto those property sales websites like Zoopla and Rightmove and try and find a similar property that's been sold since that point.

"And then you want to back-calculate its value in 1991 prices and there are free check and challenge calculators online that will convert this for you. Once you find what your property was worth in 1991, then go to the English or Scottish bands."

In England, council tax bands are determined by the property values as of April 1, 1991, and similar systems operate in Scotland. However, Lewis added an important cautionary note: "The most important point that I'm going to say, though, is I would only look at challenging my banding if I passed, clearly, both tests. The reason for that is simple."

"You can't ask for your band to be lowered - you can only ask for your band to be looked at. That means if you only pass the neighbour's check, it could mean it's not you who's in the too-high band, it's all your neighbours who are in the too-low bands. When you ask for this, their band goes up, which will not make you very popular.

"That's why I put in this second check - that's your safety check. Personally, I would not touch it otherwise."

Individuals are then able to lodge either a formal or informal appeal against their council tax banding.