Probate practitioners: Are you aware of the upcoming change to council tax?

The Levelling Up and Regeneration Bill may not seem an obvious topic of discussion for probate practitioners but hidden within the bill is a relevant change to council tax.

Whilst this hasn’t achieved royal assent yet, it is at the report stage in the House of Lords with just the third reading to go before the amended bill is presented.

Current exemption

The Local Government Finance Act 1992 gives local authorities the ability to charge council tax. The Council Tax (Exempt Dwellings) Order 1992 then sets out circumstances in which an exemption can be applied to the charge of council tax.

An estate qualifies for a council tax exemption if the property has been unoccupied since the date of death and the deceased was the legal owner of the property (either freehold interest or leasehold interest granted for more than six months) and no other person qualifies for council tax in relation to the property.

The exemption ceases six months after the issue date of the Grant (the Class F exemption). Once the Class F exemption no longer applies, the local authority may designate a property as a "long-term empty dwelling".

A "long-term empty dwelling" is defined as a property that has been unoccupied continuously for at least two years and is substantially unfurnished (section 11B (8) of The Local Government Finance Act 1992).

If designated as a "long-term empty dwelling", the local authority can charge an additional 100% of the council tax charge, increasing to an additional 200% if the property has been unoccupied for more than five years but less than 10 years and an additional 300% if unoccupied for more than 10 years.

Legislation update

Under the proposed Levelling Up and Regeneration Bill, the time limit for a property to qualify as a "long-term empty dwelling" is being reduced from two years to one year.

The rates of additional council tax will be unchanged. If passed, the new provisions will take effect from 1 April 2024 but the calculation of the period of unoccupancy will be applied retrospectively.

Financial impact

With the continued delays in the issuing of Grants, and the uncertainty of when to market a property whilst waiting for the Grant to be issued, there is a risk that more estates will have to bear higher council tax rates. Just another reminder to personal representatives to be proactive and ensure the administration is progressing in a timely manner.

Top tip

As a property must be substantially unfurnished to qualify as a "long-term empty dwelling", consider delaying the clearance of a property until as late in the conveyancing/transfer process as possible.

If you'd like to know more or require advice on how the proposed bill may affect you, please contact a member of the Charity Probate team.