The absurdity of local taxation in the UK requires little elaboration; one example suffices to illustrate the entire picture. In London, a Band D residential property valued at £691,000 incurs an annual local tax of £990. In contrast, a similar Band D property in North England, valued at £205,000, faces a local tax of £2,463. While property values are three times higher in London, the tax bill is only 40% of that in the North. This inversion, where higher assets lead to lower tax burdens, is the result of a system that has remained stagnant for over thirty years.
The root of the problem lies in the fact that local taxes are still based on valuations from 1991. Over three decades, the landscape has changed dramatically, yet the system remains stuck in a bygone era. Even more absurdly, for a new residential property completed in 2025, the government will estimate its value based on what it would have been in 1991, applying the outdated tax assessment table from that time. Back then, the land might have been barren, the surrounding area undeveloped, and transportation poorly established; the current vibrancy simply did not exist. Replacing reality with a fictional past makes any notion of fairness impossible.
A deeper structural issue is that local taxes are a form of regional taxation, which exacerbates regional disparities. Wealthy counties have high property values and substantial tax bases, with additional revenues from parking fees and fines being significantly higher. Wealthy families can afford private schooling for their children, and their need for other social services is lower, allowing them to pay less in local taxes without issue. Conversely, impoverished areas have weak tax bases and limited additional revenues, yet they must still bear greater statutory responsibilities for education and social care. As service demands grow, financial resources dwindle, leaving councils perpetually strapped for cash. Local taxes, which should help address these weaknesses, instead become a force that deepens inequality.
The Institute for Fiscal Studies (IFS) has long pointed out that the current system neither reflects property values nor the actual financial burden on households. For over thirty years, neither England nor Scotland has dared to reassess property values, while Wales managed a reassessment in 2005. Although imperfect, this step acknowledged reality and was necessary. England, however, remains trapped in the shadow of 1991, mistaking obsolescence for stability.
To break this deadlock, it will take not finesse but determination. Local taxes must be reassessed to bring the tax base into the modern era, ensuring that high-value properties bear their fair share while low-value properties are not crushed by outdated valuations. Simultaneously, the central government should take on a larger share of the structural costs associated with education and social care, allowing local taxes to be fully allocated to purposes determined by local governments.
After more than thirty years of stagnation, the system can no longer be maintained through minor adjustments. The question remains: will the UK continue to live in the illusion of 1991 valuations, or will it rebuild a fair and modern local finance system? The answer is written on the wall.
