Council tax charges across the country are set to rise on April 1, with most local authorities increasing rates by 5%, according to reports. This increase comes amid revelations that potentially hundreds of thousands of homes throughout England and Scotland may have been incorrectly categorised in the council tax banding system. According to money-saving expert Martin Lewis, refunds for incorrect council tax banding could amount to thousands of pounds and are commonplace.
Many properties have been stuck in incorrect council tax bands since 1991 due to flawed valuations. Homeowners in Wales have had a full revaluation of all properties, ensuring residents pay the correct amount, unlike England and Scotland where such comprehensive reviews have not occurred. The total estimated amount of overpaid council tax due to incorrect banding in England and Scotland remains unknown, as does how many households have actually received refunds in recent years.
Hundreds of thousands of homes across England and Scotland are thought to be in the wrong council tax band. This means it's important to check your property's in the right band – something our tried-and-tested system can help you do. Some homeowners and renters have unknowingly been overpaying Council Tax for many years, even decades, because their bands are too high, so payouts worth £1,000s are commonplace.
In the most recent tax year, 5.6 million people overpaid a combined £3.5 billion in income tax, with an average overpayment of around £689, according to accountancy firm UHY Hacker Young. HMRC paid around £3 billion back to 4.2 million people who had overpaid in the 2024/25 tax year, according to MoneySavingExpert. However, according to reports, HMRC is under no legal obligation to notify individuals of overpayments or issue refunds automatically.
According to Martin Lewis, millions of tax codes are wrong each year, and it is the individual's responsibility to check them, not their employer's or HMRC's. Taxpayers are advised to take specific steps to verify their council tax band or tax code, though exact processes vary. For council tax, individuals can check their band through the Valuation Office Agency in England or the Scottish Assessors Association in Scotland, and challenge it if they believe it is incorrect. For income tax, reviewing annual tax summaries and using HMRC's online tax checker are recommended. Without proactive verification, millions risk continuing to overpay due to systemic flaws and limited official oversight.
Millions of codes are wrong each year, so it's crucial to check yours — it's your responsibility, not your employer's, not HMRC's.
Do not assume that because it's coming from HMRC that it is right. Millions — and that is not an exaggeration, it's a literal fact — millions are wrong every year.