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Last Updated: Friday, 20 October 2006, 21:03 GMT 22:03 UK
Son of Council Tax
Peter Snowdon
The Politics Show

London house
Will a new taxing system suit owners of larger houses?

On this week's programme, David Thompson went to Northern Ireland to see how a new system of local taxation will affect people with different properties.

From April 2007, local residents in the Province will be charged 0.63% of their home's value each year (local councils can vary the precise rate).

The new 'Capital Value Rating System' is being introduced by the government through direct rule.

The Lyons Inquiry into local government in England, due to report to the government by the end of the year, is considering this option.

What if..?

So what would be the impact on council tax payers if the government decides to introduce the system in England?

The Politics Show has calculated that those with expensive properties would be hit hardest because there would be no upper limit or banding under the new system.

Currently, the highest council tax band (Band H) applies to properties valued over 320,000 - a figure based on the last property valuation in 1991.

If you divide the total value of private residential housing stock in England (2004/5) - 3003 billion - by the total revenue from council tax in the same year - 20.3 billion - you reach an equivalent capital value rate of 0.67% per house per year.

Quantum leap

Local authorities would be able to vary this rate according to local needs, but the difference in what house-owners pay now in council tax and what they would pay under a "capital value rate" is striking.

To illustrate this, the Politics Show has compiled a table for viewers to work out how they would be affected by a new "capital value rate" property tax.

We have decided to list a range of properties in an area of England where the mean average house price is closest to the national average (202,660, first quarter of 2006).

The average house price in Rushcliffe, Nottinghamshire is 202,768.

The council tax bands are based on the equivalent sale prices in Rushcliffe from 1995, the earliest available figures from the Land Registry.

The average council tax charges for each band are the latest figures from Rushcliffe Borough Council.


Property Value () Council tax band Average Council tax () 0.67% Capital Value Rate tax ()

Terraced 85,778 A 936.76 574.71

Flat & Maisonette 133,250 B 1092.88 892.78

Semi-detached 150,675 D 1405.14 1009.52

Detached 277,045 E 1717.39 1856.20

4 bed detached 550,000 G 2341.89 3685.00

5 bed detached 995,000 H 2810.27 6666.50


Sources: Land Registry, Rightmove, Halifax, Rushcliffe Borough Council, Department for Communities and Local Government, National Institute of Economic and Social Research.

(Note: All property values are average sale prices from the Land Registry website for postcodes in Rushcliffe, except the 4 bed detached and 5 bed detached which are sample advertised prices in Rushcliffe from Rightmove.co.uk.)

Join Jon Sopel and guests for the Politics Show on Sunday 22 October 2006 at 12:00 BST on BBC One.

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