Council Tax on Empty Properties: Bankruptcy and Limited Company Ownership

Bankruptcy and Empty Property Council Tax

When a property owner is declared bankrupt, the Class Q exemption under SI 1992/558 removes council tax liability on an unoccupied dwelling where the liable person is a trustee in bankruptcy.

This exemption runs for the entire duration of the bankruptcy administration — from the date of the bankruptcy order until the trustee either sells the property or the owner is discharged. During this period, no council tax is payable and no premium can be levied.

The evidence needed is a copy of the bankruptcy order or confirmation from the Insolvency Service of the trustee's appointment. If the property was already accumulating empty-home time before the bankruptcy, the empty clock continues during the exemption. Any premium after the exemption ends is based on the full continuous period the property has been unoccupied and substantially unfurnished.

A wrinkle worth knowing: if the trustee decides to sell the property and it remains vacant during the marketing period, the Class Q exemption continues while the trustee holds it. Once ownership transfers to a buyer, normal council tax rules resume — including any Class G exception for active marketing.

Limited Company Ownership

Properties held through a limited company follow standard council tax rules, with one important distinction: the company is the liable person, not its directors or shareholders individually.

For an empty property owned by a limited company:

• The empty homes premium applies based on how long the property has been unoccupied and substantially unfurnished, identically to an individual owner.
• The company must apply for any exceptions (Class G for active sale, Class M for major repairs) in the same way an individual would.
• If the company fails to pay, the council pursues the company. Directors are not personally liable merely because they are directors. If the company is dissolved, its property generally passes to the Crown as bona vacantia; company liabilities do not pass to the Crown or automatically revert to the last registered owner.

Buy-to-let companies sometimes assume holding a property through a company structure provides protection from premiums. It doesn't. The premium attaches to the property's status, not the owner's legal form. A vacant investment property owned by a limited company faces the same 100%, 200%, or 300% premium as one owned by an individual.

One area where company ownership does matter is Section 13A hardship relief. Councils are generally less sympathetic to discretionary relief applications from commercial entities than from individuals facing personal financial distress. A company holding a non-performing investment property is unlikely to meet the "exceptional circumstances" threshold most councils require.

What Both Situations Share

Whether the situation involves bankruptcy or company ownership, the premium rules and exception classes work the same way. The Empty Home Premium Guide covers the full framework, including evidence checklists for each exception class.

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