Property held in a Will Trust and liability for council tax - Class F Exemption

[875loubailey]

Theenquiry relates to a Class F exemption when someone dies.


Mymother lived alone following the death of her husband in 2009. In2010 a Deed of Variation was created which meant that 50% was ownedby my mother (owner occupier) and the remaining 50% contained in aWill Trust (my sister and I being the Trustees).


In2015 my mother passed away. I was appointed Executor andadministrator of her estate, the property was immediately put up forsale. It remained unoccupied and was cleared of all furniture.


TheCouncil sent a bill in June 2015 stating we were liable for paymentof the Council tax for the full year as we were named as owners onthe land registry certificate. The council tax bill has since beenpaid in full.


Ibelieve that following the death of the occupier normally a period ofat least 6 months exemption should apply. In addition I haveviewed an article which was published on Public Law Today whichprovides guidance on property held on trust and liability for counciltax.


Iunderstand that under Class F (Council Tax (Exempt Dwellings)(Amendment) Order 1994 in situations where the owner has died, theproperty is unoccupied, and the dwelling is held on trust by theexecutor or administrator. The dwelling then will be exemptuntil the grant of probate or letters of administration for a further6 months thereafter. Beyond the 6 months though, the liabilitywill fall to the executor or administrator as trustee, until suchtime as the dwelling is disposed of or transferred to thebeneficiary.


Ihave been in dispute with the council for some time now as I havebeen informed that we should have been given a period of at least 6months exemption. The council have insisted that the property wasjointly owned and therefore we are liable (even though it was notoccupied).


DoesCouncil tax still need to be paid by the Trust or is the house exemptunder Class F Regulations? It appears that it is rather a grey areaif the property is part of a Trust.

[Peridot]

Re: Property held in a Will Trust and liability for council tax - Class F Exemption

I think the issue you have is that you were co-owners under the trust. The class f exemption applies to the situation where the executor/administrator dealing with the estate sorts the whole property. In your situation the executor is only dealing with your mothers half of the property not the other 50%.
It may be worth checking with CAB but I suspect this is the issue you are having so the class f exemption doesn’t apply. I’m not sure if you could make use of any other exemption. I believe the rules on exemptions changed in relation to 2nd homes, which is the analogy of the 50% share, and non occupation.

[875loubailey]

Re: Property held in a Will Trust and liability for council tax - Class F Exemption

I think the issue you have is that you were co-owners under the trust. The class f exemption applies to the situation where the executor/administrator dealing with the estate sorts the whole property. In your situation the executor is only dealing with your mothers half of the property not the other 50%.
It may be worth checking with CAB but I suspect this is the issue you are having so the class f exemption doesn’t apply. I’m not sure if you could make use of any other exemption. I believe the rules on exemptions changed in relation to 2nd homes, which is the analogy of the 50% share, and non occupation.

Thank you for your reply. However, this was not a second home as my mother was the sole occupier who owned 50% of the property in a tennants in common agreement. The remaining 50% was contained in the Will Trust (my sister and I were the trustees). The property went up for sale immediately in August 2015 and I was appointed the executor to deal with the estate. According to Land Registry certificate it stated that there was a restriction on the property due to the fact it was held in Trust and this is clearly shown on the Land Registry certificate issued in 2010. My mother's home was put up for sale as I mentioned, unoccupied and furniture was removed. The property was also transferred into joint names in September 2015 and my mother's name was removed from the Land Registry Certificate.
I therefore do not understand why we were charged the full council tax for the whole of the year, bearing in mind the above information. Isn't there an argument therefore that only 50% council tax was due as in view of the fact that half of the property was contained in the Will Trust?

Separately, should the Trust have a similar discount to a single occupancy in view of this? The council have already stated if furniture was removed we would be eligible for a 25% discount, but have not applied it.

Thanks for your help so far

[Peridot]

Re: Property held in a Will Trust and liability for council tax - Class F Exemption

Hi 875loubailey,
I appreciate the frustration but you are the beneficiaries of the will trust which is the legal owner of 50% of the property. The single occupancy would apply, I would have thought but I'm not certain. I will see if I can find any further information and will post if I do, but it sounds like you've looked into it pretty thoroughly.

[enaid]

Re: Property held in a Will Trust and liability for council tax - Class F Exemption

Going through exactly the same myself paying council tax on an empty property while sale is dragging along very slowly.
The rules re council tax are up to each individual council, but 6 months after probate you should get full discount after that a discount is discretionary, our LA gives the first 2 month at 50% then full CT is payable. This is owed by the executors of the estate, makes no sense to me that an empty property can be charged at full CT when a single occupancy get a 25% discount but that's how it works. The property will be classed as a second home unfortunately for the executors. I do believe you can ask the council to defer payment until after the estate is settled or the property is sold if you can not pay that's about the only help available.

[lgfa92]

Re: Property held in a Will Trust and liability for council tax - Class F Exemption

I therefore do not understand why we were charged the full council tax for the whole of the year, bearing in mind the above information. Isn't there an argument therefore that only 50% council tax was due as in view of the fact that half of the property was contained in the Will Trust?

Separately, should the Trust have a similar discount to a single occupancy in view of this? The council have already stated if furniture was removed we would be eligible for a 25% discount, but have not applied it.

The Class F exemption can only apply where there are no other joint owners of the property - if it's in joint ownership then the liability rests with the surviving owners. For council tax purposes the charge will not be apportioned between owners, each owner will be jointly liable for the full balance which is outstanding. There is no provision for apportioning the charge by 50% nor does any restriction on sale have any effect on the liability.

A 25% single occupier discount can only be applied where there is a resident in the property. If you're looking a discount on the basis it's unoccupied and unfurnished then you need to contact the council and advise that the furniture has now been removed.

If you dispute the decision of the council then ultimately you would need to go to a tribunal for the final decision.

- - - Updated - - -

Going through exactly the same myself paying council tax on an empty property while sale is dragging along very slowly.
The rules re council tax are up to each individual council, but 6 months after probate you should get full discount after that a discount is discretionary, our LA gives the first 2 month at 50% then full CT is payable. This is owed by the executors of the estate, makes no sense to me that an empty property can be charged at full CT when a single occupancy get a 25% discount but that's how it works. The property will be classed as a second home unfortunately for the executors. I do believe you can ask the council to defer payment until after the estate is settled or the property is sold if you can not pay that's about the only help available.

You can ask the council to defer collecting payment but in a decade of working in council tax I've not personally come across a council who will actually do so.

I would also point out that once an unfurnished property is empty for 2 years then the long term empty property premium will apply.

[875loubailey]

Re: Property held in a Will Trust and liability for council tax - Class F Exemption

Hi 875loubailey,
I appreciate the frustration but you are the beneficiaries of the will trust which is the legal owner of 50% of the property. The single occupancy would apply, I would have thought but I'm not certain. I will see if I can find any further information and will post if I do, but it sounds like you've looked into it pretty thoroughly.

Thank you for your assistance. However, it does appear to be difficult to obtain a definitative answer to the position of a 'Trust' discount and how this is applied. It is noted in the guidance for Council Tax hierarchy that joint owner appears at the very bottom of the list, but there is no information with regards to part ownership of a property held in a Trust. I appreciate your help so far and would be grateful if you could look into this further for me. I have visited my local CAB and they were of no help unfortunately.

[lgfa92]

Re: Property held in a Will Trust and liability for council tax - Class F Exemption

Thank you for your assistance. However, it does appear to be difficult to obtain a definitative answer to the position of a 'Trust' discount and how this is applied. It is noted in the guidance for Council Tax hierarchy that joint owner appears at the very bottom of the list, but there is no information with regards to part ownership of a property held in a Trust. I appreciate your help so far and would be grateful if you could look into this further for me. I have visited my local CAB and they were of no help unfortunately.

The trust is treated no different from any other owner, it is an 'owner', alongside any other owners as far s6 of the LGFA92 is concerned.

CAB do not usually understand the inner workings of council tax legislation (many years of working with them, and holding their hands through council tax queries, tells me that)

[Peridot]

Re: Property held in a Will Trust and liability for council tax - Class F Exemption

Hi again,
I have been searching around to try and find you the legislative answer. Bear with me I will try and explain the reasons I believe an exemption would not apply in your situation. Igfa93 has already mentioned the Act that applies but here are the subsections and what I believe would be the reasoning of the Council in refusing the exemption.
The Local Government Finance Act 1992 governs the council tax rules as mentioned previously. Section 6 explains who is liable for council tax here:- http://www.legislation.gov.uk/ukpga/1992/14/section/6

From what I can see, under section 6(5)(a) as a beneficiary of the will trust you have a beneficial interest in the property and would therefore be deemed to have a material interest in the dwelling and therefore be 'an owner' who is then liable to pay council tax on the property. The 25% deduction relates to the 'resident' numbers in the property, not the number of 'owners'.

Before 2013 the Class D exemption - relating to properties remaining empty for up to 6 mths was removed. The Class F exemption applying to a property when someone has passed away relates to those properties where the deceased would be the sole owner, not a joint owner as is the case here (even though it is the trustee who is the legal owner, but remember as the beneficiaries section 6(5)(a) above applies).

I hope this helps untangle matters and the reasons why the Local Authority are unlikely to consider the property as exempt for the purposes of council tax liability.

[lgfa92]

Re: Property held in a Will Trust and liability for council tax - Class F Exemption

Hi again,
I have been searching around to try and find you the legislative answer. Bear with me I will try and explain the reasons I believe an exemption would not apply in your situation. Igfa93 has already mentioned the Act that applies but here are the subsections and what I believe would be the reasoning of the Council in refusing the exemption.
The Local Government Finance Act 1992 governs the council tax rules as mentioned previously. Section 6 explains who is liable for council tax here:- http://www.legislation.gov.uk/ukpga/1992/14/section/6

From what I can see, under section 6(5)(a) as a beneficiary of the will trust you have a beneficial interest in the property and would therefore be deemed to have a material interest in the dwelling and therefore be 'an owner' who is then liable to pay council tax on the property. The 25% deduction relates to the 'resident' numbers in the property, not the number of 'owners'.

Before 2013 the Class D exemption - relating to properties remaining empty for up to 6 mths was removed. The Class F exemption applying to a property when someone has passed away relates to those properties where the deceased would be the sole owner, not a joint owner as is the case here (even though it is the trustee who is the legal owner, but remember as the beneficiaries section 6(5)(a) above applies).

I hope this helps untangle matters and the reasons why the Local Authority are unlikely to consider the property as exempt for the purposes of council tax liability.

I would agree with most - Council Tax is my day job but I tend to keep things simplified as most people just want to bang their heads off the wall with it all.

Under S6(2) of the LGFA1992 any non-resident owners will fall liable where there is no-one else who is higher in the 'hierarchy of liability'. Under S6(3),where there is more than one party who meets the definition of 'non-resident owner', then they would fall jointly liable. A 'non-resident; owner' is defined under S6(5). Where more than one party has the same legal interest in the property then they thus each fall to be jointly liable under S6(2).

The reasoning behind the Class F exemption is as you've pointed out - where the liability is held by someone other than the estate of the deceased then the council tax liability vests in those parties instead of being exempt. The relevant legislation for the OP is the Council Tax (exempt dwellings) order 1992, as amended in 1994.

As the Trust was 50% owner, and the other joint owner is deceased, then liability has to head in the direction of the Trust under S6 of the LGFA1992 and the Council Tax (exempt dwellings) order 1992 (as amended) accounts for the charge not being covered by an exemption.

The valuation tribunal do see cases in similar positions as the OP, a nice summary of the refusal of a Class F exemption in a similar situation can be found in this case - http://info.valuation-tribunals.gov....sion=liability

Before 2013 the Class D exemption - relating to properties remaining empty for up to 6 mths was removed.

The Class D exemption is for people in legal detention but the confusion comes because of the Class D discount. The Class D discount replaced the Class A exemption - the Class A exemption covered properties which were undergoing works to make them habitable. Class C is the discount which replaced the Class C exemption for unoccupied and substantially unfurnished property.

[lgfa92]

Re: Property held in a Will Trust and liability for council tax - Class F Exemption

I should also add that if the local authority decline to amend the council tax account then you can appeal to the valuation tribunal but you'd need to have issued notice under s16(4) of the Local Government Finance Act 1992 before a valid appeal could go ahead.

[Peridot]

Re: Property held in a Will Trust and liability for council tax - Class F Exemption

Apologies, think I slipped keys on the D reference. Thanks for the input @Igfa92

[875loubailey]

Further to my last enquiry I have now received a response from the Council. Unfortunately, they have refused to provide a full refund of the Council tax as they have told me that my sister and I are jointly liable as owners, despite the fact that half of the property was in a trust.

This appears to correspond with the guidance shown on this post. The Council have only offered a 25% reduction from the lst October due to the fact that the property was cleared of furniture.

As I have stated the property was empty and unoccupied from the 29th June and was put up for sale in August 2015. the property was cleared on furniture and belongings, albeit in stages and remained unoccupied throughout. I was appointed executor to deal with the estate.

The council have claimed that the property was inspected from the outside on the 1st October 2015 and it was deemed as furnished. However, I have disputed this and have told them that the property had verticle blinds which were closed at all times for security purposes and was also gated at the side.

I have provided them with receipts to show that furniture was removed, but despite this they have only granted 25% refund as a single occupier from the 1st October to March 2016.

As the property was substantially cleared on furniture than surely we could apply for at the very least a 25% in council tax for the full year? I would ask whether I could challenge this further and what I would need to provide?

Finally, I have been told that I can appeal to the Valuation Tribunal if I still believe that the property should receive a Class F exemption, although it is unlikely that we will get anywhere with this in view of the information contained on this post.

Thank you for all the help and guidance so far from members who have posted replies. I look forward to receiving further guidance on this difficult subject.

[lgfa92]

Unless someone was resident it can't be 25% for single occupancy. The local authority can, within limits, set the rates for unoccupied property and so may have set it at 25%.

Providing any delegated discount is compliant with legislation and it has been granted correctly within that then the valuation office cannot overrule the council and delegated discount they offer.

I was asked a similar question to yours the other day for a client and having looked through tribunal decisions again I can't see anything which would get around the class f etc. You could try a tribunal but can't see any obvious reason they could use to overturn the council's decision.

[875loubailey]

Further to my last enquiry I have now received a response from the Council. Unfortunately, they have refused to provide a full refund of the Council tax as they have told me that my sister and I are jointly liable as owners, despite the fact that half of the property was in a trust.

This appears to correspond with the guidance shown on this post. The Council have only offered a 25% reduction from the lst October due to the fact that the property was cleared of furniture.

As I have stated the property was empty and unoccupied from the 29th June and was put up for sale in August 2015. the property was cleared on furniture and belongings, albeit in stages and remained unoccupied throughout. I was appointed executor to deal with the estate.

The council have claimed that the property was inspected from the outside on the 1st October 2015 and it was deemed as furnished. However, I have disputed this and have told them that the property had verticle blinds which were closed at all times for security purposes and was also gated at the side.

I have provided them with receipts to show that furniture was removed, but despite this they have only granted 25% refund as a single occupier from the 1st October to March 2016.

As the property was substantially cleared on furniture than surely we could apply for at the very least a 25% in council tax for the full year? I would ask whether I could challenge this further and what I would need to provide?

Finally, I have been told that I can appeal to the Valuation Tribunal if I still believe that the property should receive a Class F exemption, although it is unlikely that we will get anywhere with this in view of the information contained on this post.

Thank you for all the help and guidance so far from members who have posted replies. I look forward to receiving further guidance on this difficult subject.

Thank you for your reponse. I am seeking a reduction under the class F exemption as I understand that Council's can use their discretion to exempt properties which remain unoccupied and substantially empty of furniture. I also note that there is an article in public law today which states:-

“A further exemption is under class F (Council Tax (Exempt Dwellings) (Amendment) Order 1994 in situations where the owner has died, the property is unoccupied, and the dwelling is held on trust by the executor or administrator. The dwelling then will be exempt until the grant of probate or letters of administration for a further 6 months thereafter. Beyond the 6 months though, the liability will fall to the executor or administrator as trustee, until such time as the dwelling is disposed of or transferred to the beneficiary”.

This appears to fit our circumstances exactly. I am seeking further clarification on this. I would appreciate your comments on this.