Campaigners are currently pushing for a reform of the current council tax system as they suggest the lowest earners in the poorest areas are unfairly penalised. 

This follows the government’s announcement that will see households across England and Wales paying an additional £1.8 billion in council tax over the 2021/22 tax year – an average of £100 rise per household.

Currently, Council Tax bands in Wales are assessed by several factors, such as properties:

·         Size

·         Layout

·         Character

·         Location

·         Change in use

·         Value

The value is based on the price the property would have sold on the open market on 1st April 2003, not current market prices. At present, campaigners are pushing for property taxes to be based on today’s property values and homeowners’ ability to pay as an alternative.  

With this in mind, specialist mortgage platform Haysto analysed which areas across Wales are paying the most and least Council Tax contributions, based on the percentage of average annual salary spent on Council Tax in each area.

The national average payment for Council Tax across Wales was £1,544 per dwelling, with the average salary at £26,805 – resulting in Welsh residents paying an average of 5.76 percent of their average annual pay – the highest average proportion across all of Great Britain.

Top 10 areas in Wales for lowest council tax as a percentage of annual pay

Area

Average council tax per dwelling (£)

Average annual pay (£)

Percentage of Annual Pay Spent on Council Tax

Wales Ranking

GB overall ranking

Caerphilly

1,196

26,426

4.53

1

126

Newport

1,372

27,104

5.06

2

232

Torfaen

1,430

28,013

5.1

3

241

Rhondda Cynon Taf

1,354

26,426

5.16

4

248

Pembrokeshire

1,429

26,466

5.4

5

277

Merthyr Tydfil

1,396

25,784

5.41

6

279

Wrexham

1,522

27,773

5.48

7

285

Carmarthenshire

1,496

27,250

5.49

8

287

Flintshire

1,668

29,978

5.56

9

294

Neath Port Talbot

1,493

26,297

5.68

10

304

Ranking at number one for the lo

Ranking at number one for the lowest percentage of council tax contributions was Caerphilly. Homeowners only pay an average of £1,196 on Council Tax, just 4.53 percent of their average annual salary of £26,426.

This is despite Caerphilly properties experiencing a 5.6 percent increase in price over the last year.

Following in second place was Newport, with residents only expected to pay 5.06 percent of their average annual salary of £27,104, despite the area seeing a 12 percent increase in property prices since 2018.

Interestingly, although Merthyr Tydfil residents earn the least annual salary out of the areas featured, they had one of the highest Council Tax payments, paying £200 more than those in Caerphilly despite earning almost £1,000 less.  

Torfaen (5.1%), Rhondda Cynon Taf (5.16%) and Pembrokeshire (5.4%) complete the top five places in Wales where residents pay the lowest percentage of their annual salary towards council tax payments.

At the other end of the scale, Gwynedd residents are expected to pay the highest percentage of their annual salary for Council Tax (7.2%).

Top 10 areas in Wales for highest council tax as a percentage of annual pay

Area

Average Council Tax per dwelling (£)

Average annual pay (£)

Percentage of Annual Pay (%)

Wales

GB overall

Gwynedd

1,746

24,221

7.2

21

353

Powys

1,731

24,244

7.14

20

352

Denbighshire

1,643

24,041

6.83

19

348

Ceredigion

1,647

24,412

6.75

18

347

Isle of Anglesey

1,574

24,477

6.43

17

342

Conwy

1,590

26,064

6.1

16

328

Vale of Glamorgan

1,767

29,035

6.09

15

327

Swansea

1,535

25,227

6.08

14

326

Cardiff

1,602

26,651

6.01

13

322

Monmouthshire

2,000

34,347

5.82

12

314

With Gwynedd home to 20 percent of all second homes in Wales – the most of any Welsh county – and second home-owners are charged double council tax on their second properties, it’s unsurprising that Gwynedd tops the chart for highest council tax as a percentage of annual pay.

This is despite residents earning the second-lowest annual salary compared to the rest of the top 10 areas with the highest Council Tax percentage.

Powys ranked second place, with residents expected to pay an average of 7.14 percent of their average annual wage towards Council Tax, despite residents earning an average of £24, 244 annually.

Despite Monmouthshire residents earning over £10,000 more annually compared to their Gwynedd counterparts, proportionately they pay less council tax when properties there cost on average £323,416, whereas house prices in Gwynedd cost on average just under £200,000.

Denbighshire (6.83%), Ceredigion (6.75%) and Isle of Anglesey (6.43%) all complete the five highest areas for Council Tax contributions measured against annual average salaries.

Welsh capital Cardiff ranked ninth out of the 10 areas contributing the highest percentage of council tax contribution with residents charged £1,602 on average – 6.01 percent of their average annual salary.

Paul Coss, Specialist Mortgage Broker and Co-Founder of Haysto commented: “Many people across Great Britain will be feeling the sting of the latest council tax increases, particularly those already struggling with finances due to the ongoing pandemic.

“With Welsh residents disproportionately paying more for their council tax in relation to their income than anywhere else in the UK, you can check whether you’re entitled to any discounts and exemptions to ensure you’re not paying more than you need to.”