Households across England are bracing for a significant financial hit as council tax bills are projected to rise by 5% next year. This increase, forecast by the Office for Budget Responsibility (OBR), could affect millions of residents already grappling with the cost of living.
The Details Behind the Council Tax Hike
The OBR confirmed its assumption of the 5% rise in documents released after the recent Budget. This figure represents the maximum amount councils in England can increase bills by without needing to hold a local referendum. The rise is composed of a standard 3% increase, plus an additional 2% precept specifically earmarked for social care services.
For a typical Band D property, the current average annual bill of £2,280 is set to jump to £2,394 in the coming year. This translates to an extra £114 that households will need to find. This news follows Chancellor Rachel Reeves' announcement of a new 'mansion tax' surcharge on properties valued over £2 million, set to take effect from April 2028.
Actionable Ways to Reduce Your Council Tax Bill
Despite the looming increase, there are several legitimate strategies to lower your council tax costs immediately.
Firstly, check your eligibility for a discount. If you live alone, you are entitled to a 25% single person discount. A 50% discount applies if every adult in your household is officially 'disregarded' for council tax purposes.
Secondly, investigate Council Tax Support schemes. If you are on a low income or claim benefits, your local authority may run a Council Tax Reduction programme. In some cases, successful applicants can receive a 100% reduction, meaning they pay nothing at all.
Finally, consider challenging your council tax band. If you believe your property has been placed in too high a band, you could be in line for a backdated repayment of thousands of pounds and lower future bills. However, proceed with caution, as a challenge could also result in your band being raised if it is found to be too low, leading to higher payments.
Future Changes to Council Tax Payments
The government is also consulting on plans to change the default payment schedule from 10 months to 12 months. This would spread the cost more evenly, resulting in smaller monthly outlays. According to the Ministry of Housing, Communities and Local Government, the average Band D household would pay around £38 less each month under this system.
While households will retain the option to pay over 10 months if they prefer, the 12-month plan would become the standard. The consultation also proposes measures to slow down the debt collection process for those who miss a council tax payment.
