Friday, 16 October 2009

Challenging your council tax banding

Very useful conversation this morning with the Valuation Office Agency about what to do if you think your house is in the wrong Council Tax band. Until now I've been quite confused because I've been told that you can only appeal against your valuation within 6 months - but have then heard of other people who have managed to get re-banded. So, this is how it works:

* key point to remember is that Council Tax banding is based on the value of your property in April 1991; although the sale price since then is relevant evidence, the key question is not what it subsequently sold for, but what it would have been worth in April 1991;

* again, although you can get a very rough idea of a property's 1991 value by applying a general house price index (eg the Nationwide house price index for the South West) to a later sale price, these indices are very rough and ready; the VOA pointed out that you can get different housing market trends between different roads in the same town, so regional averages are likely to be very rough and ready indeed;

* whilst you can only appeal against your banding within six months of moving in, you can make an 'inquiry' if you think your banding is wrong; the VOA will look at your case and if you can convince them that a mistake has been made then they will re-band you; you don't have statutory "appeal rights" as such, but in some cases they can and do re-band people; if the banding was wrong right back to when the tax was introduced in 1993 then you should be able to get the change backdated;

* one thing which can affect banding is a 'material change of circumstances'; for example, if you were banded from April 1991 on the basis of an open country view and then a few years later a factory is built over the road, you may be able to argue that your value has now gone down;

There are two interesting websites to look at if you want to take things further. One is the VOA website where you can see the council tax banding of every house in your neighbourhood and another is (for example) here which gives information on the sale prices of houses in your area. The Martin Lewis 'MoneySavingExpert' website has some helpful advice, though again bear in mind the caveat that using *average* house price indices is a very rough-and-ready approach.

Given that the whole country's valuations were done in such a hurry in 1991, it would not be surprising if a significant minority were only relatively approximate. Whilst that may not matter too much if you are in any case around the middle of a council tax band, if you would have been on the cusp between two bands and ended up in the higher one it might be worth looking at.

Tuesday, 6 October 2009

Tory rise in state pension age - do the sums add up?

A very strange story appeared last night on the BBC news and reported here on the BBC website. Apparently George Osborne will announce today that the pension age for men is to be raised from 65 to 66 in 2016 - about a decade earlier than planned - and he 'hasn't ruled out' doing the same for women. 'Conservative sources' said this would raise around £13 billion, which is a very very large cut.

Leaving aside for a moment the fact that what they would do with women's pension ages appears to be something of an afterthought, how could you get such a huge figure?

If you were to make a wild guess at the saving from raising male state pension age to 66, you might say the following:

- each year, roughly 400,000 men have a 65th birthday;
- the full basic state pension is currently £95.25 per week; for the sake of round numbers and including a bit of additional state pension etc., let's say it's £100 per week (probably a bit of an underestimate);
- multiply the two together and you get £40m saving per week, and multiply by 52 and you get not much more than £2 billion; furthermore, as the state pension is taxable, if you don't pay out that £2 billion in pension then you lose a few million in tax, but we'll ignore that for now.

So, if the BBC are reporting the Tories as saying the saving is £13 billion, and my maths says not much more than £2 billion, what could be the difference?

One possibility is that the Tories are costing in raising women's ages to 66 in 2016 which really would be a drastic step, as women's pension age will only be around 63 at that stage on current plans.

There could be a few other bits and pieces to add in - eg savings on pension credit (if the age rules on pension credit etc. went up to 66 as well), but nothing on the scale needed to turn £2bn into £13 bn.

The only other explanation is that this is a figure for a whole Parliament - ie an annual saving times 5. Presumably in the 2016 to 2020 Parliament you could save over £10 billion from this measure, and then you are not far off the Tory figure. But the impression they seem to want to give is that this is a huge and specific cut, when, in the context of a Government deficit this year forecast to be in excess of £175 billion, £2 billion saving on pensions starts to look a lot more modest. Surely they can't be trying to mislead us??

UPDATE (07:50) - the mystery deepens! David Cameron has just been on BBC Breakfast saying that the saving is £13 billion each year and that it relates to men's pensions only because they haven't decided what to do with women! Talk about not thinking through your policy....