Liability for deceased person's Council Tax

poorlittlefish

My grandfather passed away a few years ago and I assumed ownership of his house went to my Dad soon after. The house stood empty for a couple of years, he then rented it out for a while but it's been empty again since September and is up for sale. Only now is my Dad going through probate. He is the sole executor and sole beneficiary of the will and claims no money is left in my Grandad's estate.

Apparently he's had a letter from the council to say he's liable to pay full Council Tax on Grandad's house. My Dad's view is that because the deeds don't have his name on, he's not liable to pay anything, let alone the full Council Tax amount. It sounds to me like my Dad never told the council that my Grandad had died, some five years ago.

Where does he stand on Council Tax liability, particularly before probate goes through (likely in early January; it's been dragging on for months)?

marliepanda

Somebody owes it. Either your dad or the estate. If he was able to rent it he was taking responsibility for it. When he sells the eatate (aka your dad) will have to pay it. Why he thinks he shouldn't have to is beyond me. Where has the rent been going?

jacques_chirac

Who was receiving the rent payments - the estate or your father? Why has probate not been sorted before now?

bryanb

I'd say the estate has been renting the house out in a legal sense. Therefore the estate should pay the CT. If your dad has been spending the estates money (rent) he's probably been breaking the law Even though he is sole beneficiary debts come first for probate.

BigAunty

I can't properly answer your question but I do want to point out that council tax arrears are a serious issue - this is a priority bill, made a priority because of the consequences of not paying it (unlike the lesser consequences that come from not paying off a credit card bill for example).

https://www.gov.uk/council-tax-arrears

Your post is confusing - you say your dad and then you 'owned it' but then your dad doesn't own it because he's not on the deeds. Do you mean that you and your father have occupied it for some of this period or that one of you inherited it but the slow probate means the deeds still remain in your grandfathers name? Did the tenants register and pay council tax when they stayed at the property? Was it unfurnished for any of this period?

I wonder whether, under the standard hierarchy of liability rules, the person highest in the chain would be responsible, meaning it would move to the occupier if the owner wasn't living there but I'm just speculating on this - someone more experienced in this area will let you know the actual position. I haven't found a council website that has given a time period when the probate must be completed.

This is the hierarchy of CT liability, published on the Citizens Advice website. It confirms who is liable - the first person that meets the criteria top to bottom must pay. I understand this to mean the occupier if the owner isn't living there.

The hierarchy of liability is:

1. a resident who lives in the property and who owns the freehold
2. a resident who lives in the property and who has a lease
3. a resident tenant
4. a resident who lives in the property and who is a licensee. This means that they are not a tenant, but have permission to stay there
5. any resident living in the property, for example, a squatter
6. an owner of the property who does not live there.

Here are links that councils have published about probate and council tax arrears. There is a lot of emphasis on council websites about the property being empty of occupants (and of furniture for other exemptions) to apply and short on detail when either or neither is present in the case of probate.



http://www.southampton.gov.uk/living/counciltax/deceased_chargepayer.aspx

If the property was owned by the deceased and is unoccupied, while it hasn’t been sold or transferred, it will be exempt from charges until probate is granted and for up to six months after that date if it remains unoccupied.

However, the Croydon council website says

If no one lives in the property after the council tax payer has died, the executor of the estate will be responsible for the council tax. However, an exemption will be awarded until probate has been granted if no one moves into the property

BigAunty

bryanb wrote: »

I'd say the estate has been renting the house out in a legal sense. Therefore the estate should pay the CT. If your dad has been spending the estates money (rent) he's probably been breaking the law Even though he is sole beneficiary debts come first for probate.

When I've browsed the council tax guidance, I have not identified that the estate is liable for any CT while probate is yet to be completed, nor have I identified any time limit for when probate should be completed. I do think occupation may have impacted exemption, though, but haven't yet specifically identified how and if this is definately the case.

One council (Manchester) even published this complex scenario because rules for exemptions have been changed around unfurnished properties:-

Example three- death of charge payer
Property owned by a single man who dies. The estate is sent through probate (takes seven months), probate is then granted and the property is put up for sale (takes a further seven months to sell).
The dwelling would be exempt based on a Class F exemption (charge payer deceased) and until probate was granted would not have any charges. Following probate being granted there would be a further six month Class F exemption, meaning a Council Tax bill of 100% charge for the final month before the property transfers to the new owner (month 14).
In this case, if the furniture was removed at the end of the six months following probate being granted, the property would transfer to being a Class C dwelling (empty and unfurnished) and would be entitled to a further one month 100% exemption.

BigAunty

marliepanda wrote: »

Somebody owes it. Either your dad or the estate. If he was able to rent it he was taking responsibility for it. When he sells the eatate (aka your dad) will have to pay it. Why he thinks he shouldn't have to is beyond me. Where has the rent been going?

I do wonder whether the occupation by other parties and receipt of rent will have compromised the exemption granted by the period of probate.

However, I think you should provide evidence to support your assertion that the estate will have to pay for the full period as I definately haven't detected any incurring of CT debts to an estate during the probate period (in fact, there is an exemption that follows for a further 6 months). CT liability ceased on the death of the original owner, as far as I can make out. Though it does seem to be premised on an empty property.

But the occupation by other tenants might be a complicating factor. This council make clear the probate period has an exemption if the property is unoccupied.

http://www.tameside.gov.uk/counciltax/discounts

Looks like the OPs father will have to provide a breakdown of the following information to the council to calculate liability as this is the type of request made by councils to those undertaking the probate.

"you can help us keep our records up to date by informing us whenever a change occurs, i.e. when probate is granted or the property is sold, transferred or reoccupied."

RAS

poorlittlefish wrote: »

My grandfather passed away a few years ago and I assumed ownership of his house went to my Dad soon after. The house stood empty for a couple of years, he then rented it out for a while but it's been empty again since September and is up for sale. Only now is my Dad going through probate. He is the sole executor and sole beneficiary of the will and claims no money is left in my Grandad's estate.

A few basics

1. If grandad owned a house, then there was money left in the estate, even if it was not cash, there was value in the house.

2. In order to transfer the deeds to himself, dad had to get probate. So plainly he has been letting it out as an executor and the income from the rental belonged to the estate.

3. In order to sell the house he has to have probate.

4. Whilst the property was rented out, it is likely that the tenants were liable for the Council Tax, unless it was a House in Multiple Occupancy for CT purposes. Dad need to tell the Council who lived there for exactly which periods.

5. The estate was liable for the rest of the time, except any permitted exemptions.

5. I hope dad has declared the rental income for HMRC purposes?

Note dad has two legal identities here and needs make sure that that as executor he pays out the CT debt before he transfers the rest of the money to the beneficiary.

BigAunty

RAS wrote: »

5. The estate was liable for the rest of the time, except any permitted exemptions.

.

I still cannot find any liability for an estate to pay council tax on an empty property that hasn't yet been granted probate though I'm happy to be challenged on this. I read it as liability starts again after probate and after new ownership but maybe I've misread?

"When a property had been occupied by a single person, who either owned or rented the property. and that person dies, the property is exempt from council tax payment for as long as it remains unoccupied, and until probate is granted. Following a grant of probate, a further six months exemption is possible as long as the property remain unoccupied and has not been sold or transferred to someone else.



Six months from the date probate is granted the full council tax will be due to be paid by the executors of the estate.




Council Tax Liability for Executors
Executors are the people appointed in the will to deal with the estate of a person who has died.
When probate is granted a document is issued to the executor providing them with the authority to deal with the estate.
If, after probate is granted ownership of a property is transferred to a beneficiary of the will, any liability for council tax passes to the beneficiary.



If for any reason after probate has been granted the property remains under the control of the estate for more than six months, a full council tax charge is due. The executor is responsible for making payment of the council tax.



The executor is not personally liable for council tax charges, and payment should be made from the deceased estate."

http://www.northampton.gov.uk/info/200028/council-tax/1003/council-tax-what-to-do-in-the-event-of-a-death

poorlittlefish

I've never owned the house or seen the will. I stayed there for a few months while I was waiting on completion of my house purchase on an informal basis a couple of years ago and the Council Tax was in my name. When I left I notified the council who'd be living there and their records got changed into the official tenants' names. There was a tenancy agreement for that tenancy.

I asked my Dad today why he didn't go through probate after Grandad died. He said that he'd been quoted £1,700, which he couldn't afford, and that the house wasn't for sale back then. All this time everything just seems to have remained in my Grandad's name. I told him that, him being the executor, my view was that he had responsibility to get everything changed over and paid - and suggested that the council could take legal action against him to recover any money owed to them. This didn't go down well!

If you think this all sounds a bit odd then I'd be the first to agree with you. I don't want my Dad to get into trouble by ignoring letters and thinking he's above the law.

jacques_chirac

BigAunty wrote: »

I still cannot find any liability for an estate to pay council tax on an empty property that hasn't yet been granted probate though I'm happy to be challenged on this. I read it as liability starts again after probate and after new ownership but maybe I've misread?

I wonder if the LA has taken the viewpoint that the beneficiary/ executor has deliberately delayed probate in order to avoid liability - and they are billing him because he has been the owner in all but name.