Are you due a council tax refund? (and how to reclaim if you’ve overpaid)

Around one million households could claim a whopping £150 million in overpaid council tax – which means an average windfall of £174 according to new research.

Even if you understand how council tax is calculated, and are receiving any reductions you may be eligible for, it’s still possible that you could have overpaid council tax, especially if you have moved house into a different council’s area and don’t pay by direct debit. This potential refund is different to the £150 council tax rebate that those in council tax bands A-D are eligible for and will likely have received. It's also important to check if you may have overpaid council tax in the past as council tax is going up again in 2023.

An investigation by MoneySavingExpert found that there are 38 councils – across England, Scotland and Wales, each with over £1 million in overpaid council tax sitting in their coffers.   

Am I due a council tax refund? 

There are several reasons why you may be due a refund on your council tax – including whether you have moved from one local authority area to another or have successfully challenged your council tax band, resulting in a lower one. 

The key question to ask yourself is whether you’ve moved house and if so, whether you closed down your old council tax account. If you forgot to close down a previous council tax account or cancel your direct debit when you moved – there’s a chance your old council tax account could have a chunk of cash sitting in it.

While local authorities should make an effort to try and track you down - any overpaid council tax can end up sitting in the council’s bank account instead of yours.

If you have moved home, and you can go as far back as 1993, check if you asked your previous council to close your old council tax account and make arrangements to have any money owed paid to you.

Another reason you may be due a refund on your council tax is if you have successfully challenged your council tax banding – resulting in a lower one.

Annabelle Williams, personal finance specialist at Nutmeg, says: “In this case you will be due a rebate on the excess amount paid - this will be backdated to when you moved into the property, usually, or up to 1993 when council tax was introduced.” 

How to reclaim overpaid council tax 

To reclaim overpaid council tax you need to contact your previous council. If you’re not sure which council you were with, you can pop your postcode into the Government’s council finder tool and follow the link to the relevant council website. 

Each council may have its own reclaim process – however many councils including Canterbury City Council and Cornwall Council for example, have online council tax refund forms so you can apply quickly and easily without having to make a call.

If you need help - your council website page should have details of other ways to get in touch or you can find contact details – including a phone number for your local authority on your council tax bill.

How long does a council tax refund take? 

There’s no fixed time limit for council tax refunds as each council may have its own process for checking and issuing them. Bournemouth, Christchurch and Poole Council for example claim you’ll get an automatic refund if you’ve paid too much money by direct debit and that refund will go into your bank account within 28 days after you have told them you have moved. And if you don’t pay by direct debit, you will be sent a cheque - so make sure you provide your new address.

If you forget to pass on a forwarding address, the money could be left sitting in the council’s account.

Legally, any overpaid council tax must be refunded and while some councils may allow you to reclaim as far as 1993 – when the council tax system was first introduced – there’s always a chance some may insist on a six year time limit across England and Wales and five in Scotland.

What does it mean when you're in credit on your council tax? 

You can be in credit with council tax very easily due to the way council tax is paid. This is because you usually make council tax payments in advance and they’re typically split over ten months starting in April.

So in the event you move home say in mid-February you’ll already have paid for the full year by then, having made your full ten monthly payments, and should get a refund.

How to avoid overpaying in the future 

Setting up a direct debit to pay your council tax makes it easier to get a refund if you overpay in the future. This way councils will already have your bank details, which makes it easier for them to process any refunds due straight back to your bank account.

The other bonus of paying by direct debit is that you’ll never miss a payment and it can make it easier to budget as you’ll know payments leave your account on a fixed day each month.

If you move home and are moving from one local authority area to another, contact your local council to close down your account, ask about any refund due and when you’ve received it, cancel your direct debit.

It’s also worth knowing that you don’t have to move hundreds of miles to find yourself in a new council tax authority. In some areas even a move from one side of town to the other could mean you’re in a different area for council tax purposes.

You could also look at what qualifies for a council tax reduction to make sure you aren't paying more council tax than you need to, even if you aren't moving house. This is especially important if you are on benefits as you may be able to bet a council tax reduction on Universal Credit.