Council tax to rise by up to 5%

Millions of households could see their council tax bill rise by up to 5% next April.

The rise is well above current inflation of 1.7% and is expected to add more than £100 to the average band D family home.

Confirmation of the big rise came after Kemi Badenoch pushed Sir Kier Starmer on whether the council tax price cap would increase next year or not.

Despite not directly answering the question, the prime minster confirmed "the threshold remains the same". Currently, councils can increase tax by up to 5% but require government approval or a referendum to go above this figure.

Virtually all councils (95%) with social care responsibilities raised council tax by the full 5% last April, according to the County Councils Network.

But three – Croydon, Slough and Thurrock – were all granted special permission by the then-Conservative government to hike bills by more to help plug huge gaps in their finances.

Slough ended up increasing its bills by 8.5%, while Thurrock hiked theirs by 7.99%, taking the total annual council tax bill for a band D property to £1,711.62. Croydon ended up keeping its increase to just 4.99%.

What is council tax?

Council tax is a priority bill that must be paid on homes in the UK. The amount you pay is set by your local authority who use the money raised to pay for services. Most people over 18 who own or rent a home must pay council tax. Although some people are exempt from paying or entitled to a discount e.g. you could be entitled to 50% off your bill if everyone living in your household is classed as ‘disregarded’. That includes anyone under 18, full-time students or student nurses, those on certain apprentice schemes, or those who are severely mentally impaired.

Anyone living alone is entitled to a 25% discount. While those on low incomes or who claim certain benefits, such as universal credit, might also qualify for a reduction, which can be as much as 100% depending on your circumstances.

What does council tax pay for?

Your council tax is used to pay for many of your local services from schools, bin collections and street repairs to libraries, social care, parks and leisure facilities. A proportion also goes towards local police, fire and rescue services. 

What happens if you fall behind with council tax payments?

Council tax is typically paid in monthly instalments. If you miss a payment, your account falls into arrears. This means you’re behind on payments. Arrears can build up and interest can also be charged. Council tax is a priority bill. You could face serious consequences if you fall behind on payments, such as legal action or a visit from bailiffs to recover the unpaid debt. The first thing you should do if you fall behind with council tax payments is get in touch with your local authority. Explain your situation. They can help by setting up a repayment plan or signposting you for free debt help.