Welsh Government council tax announcement: IFS response

The Welsh Government has announced that it no longer intends to go ahead with a council tax revaluation in April 2028. This date is legislated for, and changing it will require a vote in the Senedd. Current legislation allows postponement but not complete cancellation. The Welsh Government therefore intends to ask the Senedd to delay the planned date of revaluation to 2032 – after the next Senedd election in 2030.

This decision is incredibly disappointing. Plaid Cymru promised to make council tax fairer in its Senedd election manifesto. The fact that properties are still taxed based on their relative values as of 2003 – since when average values have risen more than 300% in Blaenau Gwent but less than 150% in areas including Cardiff, Flintshire and Wrexham – is perhaps the biggest unfairness in the current system. Taxpayers living in properties with the same values now can face bills that differ by hundreds of pounds a year simply because they were worth different amounts almost a quarter of a century ago. By postponing revaluation, the new First Minister has chosen to perpetuate this problem.

The stated reason for postponing revaluation is that the Welsh Government feels it cannot afford to pay for its preferred transitional relief scheme to phase in bill increases gradually. But this is a poor excuse. Funding is constrained. But if Welsh Ministers genuinely wanted to revalue and reform council tax, and to provide generous transitional support to those facing bill increases, there is a range of options available that would not require significant additional funding. For example, phasing in increases in bills could be paid for by phasing in reductions in bills too. Those households set to gain from revaluation would still gain – just not in full immediately. Analysis we undertook for the Scottish Government showed how such symmetric transitional schemes can be designed to pay for themselves.

By pushing the legislated revaluation date back – following a similar delay from April 2025 to the post-election April 2028 by the previous Welsh Labour government – ministers also risk entrenching council tax revaluation as the perennially kicked can. This is exactly the scenario legislation for regular revaluations passed in 2024 – which Plaid Cymru MSs voted unanimously for – was designed to avoid.

Stuart Adam, a Senior Economist at the IFS, said:

‘This is an incredibly disappointing decision. There is no principled argument for allowing council tax to become even more out of date. Failing to go ahead with revaluation means that people living in properties that are equally valuable will continue to face very different tax bills just because their homes were worth different amounts in 2003. People living in properties whose value has gone up by less than the Welsh average since 2003 will continue to pay too much tax compared to those living in properties whose value has gone up by more than average. That is simply unfair.

The reason given for postponing the revaluation is nonsensical. In effect, the Welsh Government says that, because it doesn’t want to gradually phase in cuts to council tax bills for those who would gain from revaluation in order to pay for phasing in increases in bills, it will instead stick with the current, outdated system – and not cut those households’ bills at all. That is absurd logic.

If revaluation cannot go ahead in 2028, there is no reason to think it will be easier in 2032. After another four years, valuations will be even more out-of-date, so revaluation will probably entail even bigger changes in households’ bills than in 2028. And there is no reason to think that the Welsh Government’s funding will be less constrained.

Wales had taken the lead in proposing and legislating for revaluation and reform of council tax – in contrast to England and Scotland. Today’s decision is therefore doubly disappointing. Not only will it perpetuate the unfairness of the existing system in Wales; it will also no longer be possible to point to Wales as an example of beneficial reform when trying to persuade policymakers in Edinburgh and Westminster to be bolder with their plans.’