Council tax for bedsits

Background

This note explains where Council Tax is payable in respect of individual bedsits. For Council Tax purposes the chargeable unit is a "dwelling". A dwelling carries a banding depending in its value, between Band A, the lowest, and Band H, the highest. Normally, the banded unit on which Council Tax is payable would be the particular house, semi detached house, terrace, bungalow etc concerned. Usually, one would expect this unit to be a self contained unit. A bedsit may simply be a room which is separately rented out but with shared use of facilities such as kitchen, bathroom or toilet. Alternatively, it may have some or all of these facilities en suite. On the other hand when one encounters a flat this will be self contained and will have its own banding because it is a separate chargeable unit for Council Tax purposes. Usually bedsit accommodation lies somewhere in between a self contained flat on the one hand and a shared house of the kind occupied by students, young people etc as a group on the other. Perhaps one would not normally expect a bedsit to be separately banded. Unfortunately, this is not the case and often bedsits have their own separate banding. This note explains why. These decisions are made by the Valuation Office Agency (VOA); not the local authority which is responsible for collecting Council Tax. However, it is often at the request of the local authority that bedsits may be rebanded as individual units. This can happen in two situations -

  • Where a bedsit is "separately occupied".
  • Where a bedsit is self contained (the so called "disaggregation regulations".

Even if the VOA is entitled to assign a separate banding to an individual bedsit this is not necessarily always done in practice because the local authority or the Valuation Office may not be aware of the existence of the bedsits

The purpose of this note is to explain the state of current case law which sets out the circumstances in which an individual bedsit can have its own banding.

This is about the unit on which Council Tax is levied; not about who is liable to pay the Council Tax. There are separate regulations regarding this aspect which are not dealt with in this note.

Appeals can be made to the Valuation Tribunal (VT).

Separate Occupation

The first thing the VOA has to do is to decide whether a bedsit is "separately occupied". Essentially, this is based on old rating law going back to the time when domestic premises were still rated. Essentially, a dwelling is defined in terms of what was a "hereditament" for rating purposes. In some situations a bedsit with shared facilities can be regarded as being in "separate occupation" in which case it will normally be treated as a separate hereditament in which case it will be assigned its own banding (in practice usually Band A). Council tax will then have to be paid in respect of this unit.

The VOA must decide in the first instance whether or not there is a separate occupation and only if it is not can they go on to consider the second question of whether or not the unit is "self contained" - see next section. If it is a self contained unit (SCU) then it will be separately banded anyway.

The first question the VOA ask themselves therefore is "What is the extent of the hereditament", i.e. who occupies what and on what basis? What is the extent of someone's old style rateable occupation. If, within a building, there is a unit of occupation which would have formed a hereditament in its own right under the old rating legislation then it is regarded as a separate dwelling based on occupation, irrespective of whether or not it is self contained. This then attracts its own banding. However, in certain circumstances what are called the aggregation rules will apply - see below. The Valuation Office will apply these rules where applicable. The traditional test for determining that the unit has its own separate rateable occupation are -

  • Actual occupation.
  • Exclusive occupation.
  • Possession must be of beneficial value.
  • Occupation must not be transient.

In essence the unit must be capable of accurate identification and there needs to be a generally stable pattern of occupation. If occupation is transient, i.e. occupiers move in and out quickly then the owner of the building may well be regarded as being in paramount occupation of the building as a whole so that that is treated as one unit, i.e. the building is the hereditament; not the individual rooms within it. It is not necessarily the length for which the tenancy is granted; more it is about the actual turnover in occupancy.

The rest of this guide contains sections on relevant case law, disaggregation and aggregation.

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