The Welsh Government has commissioned the Valuation Office Agency to revalue all the country’s homes.
This will allow the Government to establish a new system of council tax bands, reports WalesOnline.
At present, there are nine tax bands in Wales, from A to I, that were put in place based on property values in April 2003.
The additional tax band of Band I was added in April 2005 for the highest value properties, for properties valued at £424,001 and above.
Wales is the only country in the UK that has previously updated its valuations since council tax was introduced in 1993.
READ MORE: British Gas has reopened its energy debt grants fund – and anyone can apply
Rates in England and Scotland are still based on the 1991 evaluations for when the tax was set up. People in Northern Ireland pay the equivalent of council tax through the rates system.
A report by the Institute for Fiscal Studies found house prices across Wales had increased by 150 percent from 2003 to 2022.
This means those who live in properties which have gone up in value by more than the average since 2003 may be paying less council tax than they should.
Those in homes whose value has kept in step with the Wales average may be paying more than they should.
The IFS described the current banding system in Wales as “out-of-date, regressive and distortionary”.
Legislation will be put in place in April 2025 setting out the changes to council tax with finance minister Rebecca Evans to outline how the new system will work later this year.
The reevaluation will update all properties’ tax band based on property values at April 1, 2023.
The law states there must be two years between the date of the new valuation list being released and the changes to council tax being brought in.
Ms Evans said the current system is “regressive”. She said: “It places a higher relative burden on those with lower wealth.
“And, even though our system is more up to date than elsewhere, it is still 20 years out of date.”
She assured the changes were “not about raising a single penny more in overall revenue” but about making the system fairer.
But she admitted there would be “winners and losers” as some residents pay more tax while others see their bill decrease.
The minister said it was not the case that if the value of a person’s property has increased, they will pay more tax.
She explained: “What matters is the relative position of your home across all properties in Wales, and also, of course, any discounts and exemptions that you might be eligible for.”
She said the Government is exploring if transitional arrangements will be needed as taxpayers move to the new system.
According to the Welsh Government website, people may be able to get a council tax discount if they are:
- Living in a low-income household
- Living alone
- A student
- Severely mentally impaired
- Disabled
- The property is empty.
For the latest personal finance news, follow us on Twitter @ExpressMoney_.
