Council tax bills are set to rise by 4% this year to around £1,146 per household, the government has confirmed.

The average household in England will see their council tax bill increase by around £45 a year in 2008/09.

Last December, local government minister John Healey urged local authorities to keep increases “substantially below 5% a year”. However, Alistair Darling warned in his Budget that council tax bills could rise by an average of 5.1% in 2008/09.

Healey now says that the majority of Local Authorities will increase council tax by an average of 4% - however, eight local authorities have failed to comply and now face government probes. These authorities are Lincolnshire, Cheshire, Leicestershire, Warwickshire, Surrey, Bedfordshire and Norfolk Police Authorities, and Portsmouth City Council.

The government uses council tax band D homes as a benchmark to calculate the charge for other bands, despite the fact that nearly two-thirds of properties in the England are in council tax bands A to C.

In 2008/09 band D dwellings will see their council tax bills increase by an average of 4% from £1,321 to £1,374 a year. This is up from £798 in 1999/00.

Are you paying too much?

The New Local Government Network has called on the government to overhaul the council tax system by revaluating properties across the country for the first time since 1991. This would ensure they are in the correct tax band.

It is estimated that outdated property valuations mean thousands of households are in incorrect tax bands, and are potentially paying too much council tax.

If you are not in the right tax band then you might be entitled to reclaim hundreds of pounds in council tax.

Read our article on the simple steps you need to take to check you aren’t paying too much tax.

• tax
• Council tax