Martin Lewis issues council tax warning for thousands of households after £10,500 payout

Martin Lewis explained how up to 400,000 homes are estimated to be in too high a council tax band - if this is you, then you could be owed money back

Martin Lewis has issued a warning to hundreds of thousands of people who could be owed huge sums of money back from council tax overpayments.

The MoneySavingExpert.com founder explained how up to 400,000 homes are estimated to be in too high a council tax band. If you're found to be in the wrong council tax banding, you'll not only be owed money back, but your council tax bill will be lower going forward.

Writing in the latest MoneySavingExpert.com newsletter, Martin Lewis said: "Huge numbers have had their bands lowered and got £1,000s in backdated payouts." If you suspect you may be paying too much council tax, you need to do your research first before issuing a formal challenge to get your band lowered.

The first step, is to see what council tax band your neighbours are on. You can check council bands online for free, so you don't need to ask your neighbours - just make sure you try and compare homes of similar sizes and value. Use the GOV.UK website to do this for houses in England, or the Scottish Assessors Association for properties in Scotland.

Next, you need to work out how much your property was worth in 1991, as this is when council tax was launched by the Government. MoneySavingExpert.com has a free calculator tool to help you do this, as well as a table on what band you should have been put in.

Once you've done these checks, if you think you’ve got a good case on your hands you can contact the Valuation Office Agency (VOA) in England and Wales. For home in Scotland you'll need to contact the Scottish Assessors Association (SAA) to submit your challenge.

If you are successful, the valuation office will contact you and the band will be changed - and you’ll be due money back. You can appeal to an independent valuation tribunal if you're not happy with the decision. It is important you do these checks first, as it is possible that you could be in too low of a council tax band.

This could then impact your neighbours as well - for example, it may turn out that your entire street is in too low of a council tax band, and this would then push up all your bills. But it is worth researching - as many people are successful in their council tax challenge.

MSE shared one success story from one MSE forum user known only as Fritzyboy, who said: "Early this year, following Martin's advice, we checked our nearest neighbours with similar houses. We were in band G but they were in band F. We made a claim and received over £10,500 (it was our money all along)! Get checking, friends! Thanks Martin and the MSE team."