Fancy cutting £500 off your council tax bill and investing it instead?

If you feel that your council tax is too high for where you live, you might be right.

Council tax is projected to cost households an average of £1,740 for the 2025-2026, according to the Office for Budget Responsibility, an increase of 6.1% from last year.

But you may be able to reduce your council tax bill by proving that your residence is in the wrong tax band. Last year, 27% of people who challenged their tax band were moved into a lower one, which could save hundreds of pounds each year.

How much could I save?

Because each local authority establishes its own rates, you will need to refer to your local bands to see how much you could potentially save. But for most areas, the difference between is hundreds of pounds each year.

For example, if your local authority was Wolverhampton, the difference in the 2025-2026 tax year between Band D and Band E is £536.44.

Sample of Council Tax band rates across the UK

Source: Newcastle, Wolverhampton, Kent County, Luton and Lancaster city councils

In many cases, a move down in council bands could save you over £500 per year, or about £42 per monthly payment. If this money was instead invested in the market each month, with an average annual 5% return, you could accumulate an extra £6,522 before fees over 10 years.

How council tax bands are established

Council tax bands for England were put in place in 1991, and in many cases haven’t been updated since. They are based on the value of your property, and factor in location, size, layout, and character. The higher your band, the more you will pay in council tax. The rates themselves are established by your local authority. For example, if you lived in Oxford, it would be established by the Oxford City Council.

However, these bands in many cases have not been updated. So, they are based on the value of your property in 1991, not its current value. To get an idea of inflation of these prices, the cost of the average home in 1991 was £54,547 and has risen to £270,867 by 2025, according to Nationwide’s House Price Index.

Council tax band values established 1991 (England)

Source: Valuation Office Agency uk.gov

If you live in Wales, this system was put in place slightly later, so there may be less of a chance of a change to your band. For those in Scotland, the bands were also put in place in 1991, but the process for challenging is slightly different.

Am I in the right council tax band?

If you feel that your home may be in the wrong council tax band, there’s a few steps you can take to gain evidence. First, you can see if your valuation is in line with your neighbours with similar properties. You can look this up on the Valuation Office Agency (VOA) website, using your postal code. This will also inform you of when your council tax band was last updated. If you’ve had a more recent valuation of the property, this could help your case for moving bands.

You can use online calculators for housing values to get a clearer picture of what your property would have been worth in 1991 to make an argument for a change in band. Even if your property wasn’t built at this time, you can use this to establish what something similar would have been worth.

How do I challenge my council tax band?

If you believe you are in the wrong council tax band, you can submit your property for review. But it’s important to be aware that there’s also a chance your council tax band will go up, rather than down. In the government’s 2024 report, less than 1% of properties put up for review were assigned a higher band. But your submission for review can also impact your neighbours' band, which may not help the attendance of your summer barbeque.

You can either submit a formal or informal challenge for your band. Properties are only eligible for a formal challenge if you’ve been paying council tax on them for less than six months, the band was changed in the past six months, or there’s been a change affecting your property.

If you don’t fall under this category, you can still make a challenge, but you’ll need to provide evidence along with your submission. This often includes valuations of similar surrounding properties.

Once you’ve submitted your claim, it can take up to six months for a formal challenge and 12 for an informal challenge before you receive your decision.

The process to submit your council tax challenge could be a bit of an endeavour. But if it means over £6,000 of savings down the line, it could be an evening well spent.