“Councils should not be expected to run a new national tax system that could leave them out of pocket and undermine local democratic accountability.”
Councils should not be used to run a national tax for high-value properties that could be expensive for councils, confusing for residents and damaging to local accountability, the Local Government Association warns.
The Government’s High Value Council Tax Surcharge (HVCTS) is proposed as a new national tax on homes valued above £2 million. It would be set entirely by central government.
However, under the plans, councils would be responsible for billing, collecting and enforcing the surcharge, despite having no control over the tax rate, eligibility rules or exemptions. Councils would also need to identify liable owners, administer deferrals, manage appeals, and pursue debt recovery – including from overseas owners. But councils will not retain the income they collect, and it will instead be returned to Government.
In its consultation response to the plans, the LGA, which represents councils across England, said this would create “a complex, costly and inefficient parallel system” to the current council tax system, with significant staffing, legal and technology costs, and risks leaving councils out of pocket if Government does not fully fund the new burdens.
While the Government has said the revenue raised will support local government services, government has provided little detail about how this will work. For example, whether this funding will be additional rather than offset by reductions elsewhere.
The LGA’s consultation response also raises concerns that:
- A national tax labelled “council tax” will confuse residents who may hold local councillors accountable for a tax that has nothing to do with them.
- Identifying and enforcing payment from non‑resident and overseas owners will be resource‑intensive and costly, with unclear legal powers.
- The system could be disproportionately burdensome for areas with only a handful of high‑value properties.
The LGA is calling for government to consider national administration of the surcharge instead of using councils. If an alternative to using councils cannot be found to administer the surcharge, it must be transparent in bills and any other material sent to bill payers that the surcharge is a national charge.
At the very least, it must provide upfront investment so councils can prepare once draft property lists are published and guarantee full cost recovery for all administrative, legal and enforcement activity.
Cllr Kam Rai, Chair of the LGA’s Resources Committee, said:
“The surcharge is a national tax, yet councils would be left to administer it, carry the risk, and deal with the confusion it will create for residents.
“Without full funding for implementation costs and clear accountability, this proposal risks adding cost and complexity at a time when councils are already under enormous pressure.
“We need a cast-iron guarantee from government that any money raised must be genuinely additional and must not be used to offset reductions elsewhere.
“Councils should not be expected to run a new national tax system that could leave them out of pocket and undermine local democratic accountability.”
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