Who pay the property tax on rented property?

Property owners and tenants often have questions about who is responsible for paying council tax on rented properties. Council tax is a local tax levied on domestic properties, and the liability for payment can vary depending on the specific circumstances. This blog aims to provide a clear understanding of the council tax obligations for both landlords and tenants.

In most cases, tenants are responsible for paying council tax on the property they are renting. However, there are exceptions to this rule, such as when the property is classified as a House in Multiple Occupation (HMO) or when the property is vacant. Landlords may also be liable for council tax during certain periods, such as when the property is undergoing renovations or between tenancies.

Understanding the council tax responsibilities is crucial for both landlords and tenants to avoid any misunderstandings or potential legal issues. This blog will explore the various scenarios, exemptions, and discounts related to council tax on rented properties, providing practical tips and guidance for all parties involved.

What is council tax?

Council tax is a local tax levied on domestic properties by local authorities in the UK. It is a mandatory charge that helps fund essential services provided by the council, such as waste collection, police and fire services, and the maintenance of public spaces.

The amount of council tax payable is determined by the value of the property and its designated council tax band. Properties are assigned to one of eight bands, ranging from Band A (the lowest value) to Band H (the highest value), based on their estimated value on a specific date in 1991.

The council tax rates vary between local authorities, as each council sets its own rates based on the services it provides and the budget required to fund them. Residents can check their council tax band and the applicable rates with their local authority or through online resources.

Understanding council tax is crucial for both property owners and tenants, as it is a legal obligation and failure to pay can result in penalties and potential legal action.

Responsibility of Tenant

As a general rule, tenants are responsible for paying council tax on the rented property they occupy. This responsibility is typically outlined in the tenancy agreement, and failure to pay council tax can result in legal consequences. Here are three main points regarding a tenant's responsibility for council tax, along with subpoints for further clarification:

General Rule: Tenants Pay Council Tax

1. The tenant's name must be on the council tax bill for the property.

2. Tenants are liable for council tax from the date they move into the property.

3. If multiple tenants share the property, they are jointly responsible for paying the council tax.

4. Tenants may be eligible for council tax discounts or exemptions based on their circumstances (e.g., student status, disability, or low income).

5. Tenants should inform the local council of their tenancy and provide the necessary details to ensure accurate billing.

Responsibility of Tenant

1. If the property is classified as a House in Multiple Occupation (HMO), the landlord is typically responsible for paying council tax.

2. If the property is vacant and unfurnished, the landlord may be liable for council tax during the vacant period.

3. If the tenant is a student and the property is solely occupied by students, they may be exempt from paying council tax.

4. If the tenant is a diplomat or a member of a visiting armed force, they may be exempt from paying council tax.

5. If the tenant is a care worker living in the property to provide care for the landlord or a member of the landlord's family, the landlord may be responsible for council tax.

Tenant's Obligations

1. Tenants should pay council tax promptly and on time to avoid penalties or legal action.

2. Tenants should inform the local council if their circumstances change, as this may affect their council tax liability or eligibility for discounts.

3. Tenants should keep records of council tax payments and receipts for their reference.

4. Tenants should communicate with their landlords regarding any council tax issues or disputes.

5. Tenants should be aware of the council tax rates and any potential changes in their area.

It is essential for tenants to understand their responsibilities regarding council tax and to comply with the relevant regulations. Failure to pay council tax can result in legal consequences, such as court summons, fines, or even eviction in extreme cases. By being proactive and communicating with the local council and their landlord, tenants can ensure they fulfill their council tax obligations and avoid any potential issues.

Responsibility of landlord

While tenants are typically responsible for paying council tax on rented properties, there are certain situations where the landlord may be liable for the council tax bill. Here are four main scenarios where landlords are responsible for council tax payments, along with subpoints for each:

Houses in multiple occupation (HMOs)

1. An HMO is a property rented out by at least three tenants who are not from the same household (family).

2. In HMOs, the landlord is responsible for paying council tax, not the individual tenants.

3. This rule applies even if the tenants have separate tenancy agreements or rent agreements.

4. The landlord can choose to include the council tax cost in the rent charged to tenants.

5. Failure to pay council tax on an HMO can result in fines and legal consequences for the landlord.

Vacant properties

1. When a property is vacant and unoccupied, the landlord is responsible for paying council tax.

2. This applies during periods between tenancies or when the property is undergoing renovations.

3. Some councils offer discounts or exemptions for vacant properties, but the landlord must apply for these.

4. Landlords should inform the council when the property becomes vacant and when a new tenant moves in.

5. Failure to pay council tax on a vacant property can lead to fines and potential legal action.

Properties undergoing renovations

1. If a property is undergoing major renovations or structural changes, the landlord may be liable for council tax.

2. This is because the property may be considered uninhabitable during the renovation period.

3. Landlords should check with their local council for specific rules and exemptions related to renovations.

4. Proper documentation and permits may be required to claim exemptions or discounts.

5. Failure to pay council tax during renovations can result in fines and penalties.

Furnished holiday lettings

1. Properties classified as furnished holiday lettings (FHLs) may have different council tax rules.

2. In some cases, landlords may be responsible for paying council tax on FHLs.

3. The rules and regulations for FHLs can vary between councils, so landlords should check with their local authority.

4. Proper documentation and records may be required to claim any exemptions or discounts.

5. Failure to comply with council tax rules for FHLs can lead to fines and legal consequences

It's important for landlords to be aware of these scenarios and to communicate clearly with their tenants and local council regarding council tax responsibilities. Seeking professional advice from a tax accountant or legal expert can also help landlords navigate complex council tax situations and ensure compliance with local regulations.

Council tax exemptions and discounts

Certain circumstances may qualify a rented property for council tax exemptions or discounts. Here are some common scenarios:

1. Vacant properties: If a property is unoccupied and substantially unfurnished, it may be exempt from council tax for a specific period.

2. Student accommodation: Full-time students may be eligible for a council tax exemption or discount, depending on the local authority's rules.

3. Severe mental impairment: If a tenant or their spouse/partner has a severe mental impairment and meets certain criteria, they may be entitled to a council tax discount.

4. Single occupancy: If only one adult lives in the property, they may qualify for a 25% discount on the council tax bill.

5. Low-Income households: Some local authorities offer council tax reductions or support schemes for households with low incomes or those receiving certain benefits.

6. Disabled adaptations: Properties with specific adaptations for disabled residents may be eligible for a council tax discount or reduced rate.

It's essential to check with the local authority for the specific exemptions and discounts available, as well as the eligibility criteria and application processes.

Determining council tax liability

Determining who is liable for paying council tax on a rented property can be a straightforward process if you follow these steps:

1. Identify the property type: The first step is to determine whether the property is a standard residential dwelling or a House in Multiple Occupation (HMO). HMOs have different council tax rules.

2. Check occupancy status: If the property is occupied by tenants, the liability typically falls on them. However, if the property is vacant, the landlord may be responsible for paying council tax.

3. Consider exemptions and discounts: Certain properties or individuals may be eligible for council tax exemptions or discounts, such as student households or properties undergoing major renovations.

4. Review the tenancy agreement: The tenancy agreement should clearly outline the responsibilities for council tax payment. Both parties should refer to this document for clarification.

5. Communicate with the local council: If there is any uncertainty or dispute, it is advisable to contact the local council for guidance on council tax liability for the specific property and circumstances.

By following these steps, landlords and tenants can determine their council tax obligations and avoid any misunderstandings or potential legal issues.

Tips for landlords and tenants

Being well-informed about council tax responsibilities can help landlords and tenants avoid disputes and ensure compliance with local regulations. Here are some useful tips for both parties:

Tips for landlords

1. Clearly define responsibilities: Explicitly state in the tenancy agreement who is responsible for paying council tax. This will help prevent misunderstandings and potential disputes later on.

2. Stay up-to-date with regulations: Council tax rules and regulations can change over time. Stay informed about any updates or changes that may affect your rental properties.

3. Provide accurate property information: Ensure that you provide the correct property details, such as the number of bedrooms and occupancy status, to the local council. This will help them calculate the correct council tax amount.

4. Notify the council promptly: If the property becomes vacant or undergoes any changes that may affect council tax liability, promptly notify the local council to avoid any penalties or incorrect charges.

5. Keep records: Maintain accurate records of council tax payments, exemptions, or discounts applied to your rental properties. This will be helpful for tax purposes and in case of any disputes.

6. Claim exemptions and discounts: Familiarise yourself with the available council tax exemptions and discounts for rental properties, such as those for vacant periods or properties undergoing renovations.

7. Consider council tax in rent calculations: If you plan to include council tax in the rent, make sure to clearly communicate this to potential tenants and adjust the rent accordingly.

Tips for tenants

1. Understand your responsibilities: Read the tenancy agreement carefully and clarify who is responsible for paying council tax – you or the landlord.

2. Obtain a council tax bill: If you are responsible for council tax, ensure that you receive a council tax bill from the local authority. If you don't receive one, contact them to avoid any penalties or legal issues.

3. Pay on time: Council tax payments are typically due in advance, so make sure to pay your council tax bills on time to avoid any late payment penalties or legal action.

4. Check for discounts and exemptions: Depending on your circumstances, you may be eligible for council tax discounts or exemptions. For example, if you live alone or are a student, you may qualify for a discount.

5. Notify the council of changes: If your living situation changes, such as a new tenant moving in or out, inform the local council promptly to ensure that your council tax liability is adjusted accordingly.

6. Keep proof of payments: Retain records of your council tax payments, such as receipts or bank statements, in case any disputes arise with the landlord or the local authority.

7. Communicate with your landlord: If you encounter any issues or have concerns regarding council tax, promptly communicate with your landlord to resolve the matter amicably.

By following these tips, both landlords and tenants can ensure a smooth and hassle-free experience when it comes to council tax on rented properties. Clear communication, understanding of responsibilities, and staying informed about regulations can help prevent misunderstandings and potential legal issues.

If you're a landlord or tenant in the UK looking professional guidance on property tax matters, dns accountants can be your trusted partner. We have team of experienced property tax advisors specialises in providing expert assistance to navigate the complexities of council tax, rental income tax, and other property-related tax obligations.

We can help you understand your responsibilities, claim eligible deductions and reliefs, and ensure compliance with the latest tax regulations. Whether you need advice on council tax liabilities, rental income reporting, or any other property tax-related matter, their tailored services can provide you with peace of mind.

Don't hesitate to contact dns accountants today. Reach out to with us at 033 0088 3616, email contact@dnsaccountants.co.uk, or book a free consultation to discuss your specific needs and receive expert guidance from dedicated professionals.