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What is council tax, how much has it gone up, and how is it calculated? What is council tax and how much is it going up?
(5 months later)
Council tax bills have gone up for millions of households in England and Wales. Council tax bills are set to rise for millions of households in England, Scotland and Wales in April.
Large increases set by local authorities came into force on 1 April. Many have also slashed services in an effort to balance their books. The government is increasing the amount of money it gives to councils in England in 2025-26.
How much is my council tax bill going up by? But the Local Government Association says council finances remain "extremely challenging", and warned there could be further cuts to services.
Councils with social care duties can raise council tax every year by up to 4.99%, without triggering a referendum. Others can increase it by up to 2.99%.
The County Councils Network previously predicted that 75% of councils would introduce the maximum increase in April 2024.
The average increase for a band D property in England for 2024-2025 will be £106, taking bills up to £2,171, external. The average rise in April 2023 was £99, external.
Councils can increase bills by more than 5% without a referendum if they have government permission.
Birmingham City Council, for example, has approved an increase of 21% over the next two years, as it tries to make savings of £300m.
Woking Borough Council agreed an increase of 10%. Thurrock put bills up by 8%, while Sough approved an 8.5% rise. All have effectively declared themselves bankrupt.
In Wales, a 12% council tax rise was approved for Pembrokeshire.
How much is council tax going up in Wales?
Council charges also rose in Northern Ireland. However, in Scotland they are frozen until 2025.
What is council tax and who pays it?What is council tax and who pays it?
Council tax is a compulsory charge on properties in England, Scotland and Wales. It is set by local authorities to raise money for providing services.Council tax is a compulsory charge on properties in England, Scotland and Wales. It is set by local authorities to raise money for providing services.
Typically, anyone who is over 18 and owns or rents a home has to pay council tax.Typically, anyone who is over 18 and owns or rents a home has to pay council tax.
However, there are some exemptions and discounts.However, there are some exemptions and discounts.
Someone living alone, for example, is entitled to a 25% reduction, external.Someone living alone, for example, is entitled to a 25% reduction, external.
Properties occupied only by students are exempt.Properties occupied only by students are exempt.
And there are some discounts if you, or someone you live with, has a disability, external. Some discounts are available if you - or someone you live with - has a disability, external.
Most people pay in 10 monthly instalments and then don't pay anything in February and March. Most people pay in 10 monthly instalments from April onwards, and then pay nothing in February and March.
Northern Ireland uses a domestic rating system, external instead of council tax. Northern Ireland uses a domestic rates system, external instead of council tax.
How much are council tax bills going up in April?
Councils in England with responsibility for delivering social care can increase council tax every year by up to 4.99% without triggering a referendum, or local vote. Smaller councils without social care duties can increase bills by up to 2.99%.
For 2025-26, the government is letting six areas bypass the 4.99% cap.
Bradford Council will be allowed a 10% increase, while Newham and Windsor and Maidenhead can both implement a 9% rise.
Birmingham, Somerset and Trafford can put bills up by 7.5%.
Several councils were not given permission to impose larger increases, including Hampshire, which had asked for a 15% rise.
Most other councils have yet to set out their full plans for 2025-26, but the County Councils Network predicts that 93% of its members will introduce the maximum permitted increase, external in April 2025.
In April 2024, the average increase for a band D property in England was £106, external, which took the average bill to £2,171.
Council tax rates in Scotland have been frozen or had limited increases since 2007, but they are expected to go up in April, in some cases by as much as 10%.
The country's 32 councils have warned they faced a potential shortfall of £392m in 2025-26 - which could rise to £780m the following year.
The Scottish government says it is offering local authorities an extra £1bn in 2025-26 to help reduce the scale of any rise.
Council tax rates in Wales are also expected to rise in April. Wales' 22 local authorities were given £253m by Welsh ministers in December's draft budget, but council leaders said more money is needed.
The Welsh Local Government Association previously estimated that councils were facing a £560m funding gap.
How is council tax calculated?How is council tax calculated?
How much you pay depends on the council tax band your property is in. The more expensive the property, the higher the band. How much you pay depends on your property's council tax band. The more expensive the property, the higher the band.
In England and Scotland, bands are based on the price the property would have sold for in 1991, and in Wales it is 2003. Northern Ireland's system uses 2005 prices. In England and Scotland, bands are based on the price the property would have sold for in 1991, while in Wales the base year is 2003. Northern Ireland's system uses 2005 prices.
You can check which band your home is in: You can check your home's band in:
England and Wales, externalEngland and Wales, external
Scotland, externalScotland, external
Northern Ireland, externalNorthern Ireland, external
Where does my council tax money go? Council tax bills also include additional charges - called levies - which pay for other services.
Council tax is a major source of income for most councils. It helps fund numerous services, including: One goes towards the cost of care homes and other adult social care services. Another is set by local police and fire authorities to help fund their work.
Some cities with mayors, such as London and Manchester, can also add a separate levy that covers funding other services.
The Northern Ireland Assembly has proposed changing its domestic rate system to increase the amount paid by higher value homes from April 2025.
What does council tax pay for?
Council tax funds local services, including:
rubbish collectionrubbish collection
street lightingstreet lighting
librarieslibraries
police and fire servicespolice and fire services
youth clubsyouth clubs
parks and recreation facilitiesparks and recreation facilities
care services
Council tax helps to fund local services such as playgroundsCouncil tax helps to fund local services such as playgrounds
Council tax bills also include additional charges - called levies - which pay for other services. Analysis by the Local Government Association (LGA) found that increased demand and rising costs meant 61% of council spending in 2023-24 went on children's services and adult social care, external - up from 52% in 2013-14.
One goes towards the cost of care homes and other adult social care services. Another is set by local police and fire authorities to help fund their services. This has reduced the amount of money available for other services.
Some cities with mayors, such as London and Manchester, can also add a separate levy that covers funding various services.
Where else do councils get their money?Where else do councils get their money?
Councils in England can raise some income by charging for services like parking, swimming pools, planning applications and from commercial investments. About half of local authority funding comes from council tax,, external according to the Institute for Government (IFG).
But about half of local authority funding comes from council tax, external, the Institute for Government says. Councils in England can also raise some income by charging for services including parking, swimming pools, planning applications, and from commercial investments.
Most of the rest comes from a mix of business rates and central government grants. Most of the rest comes from a combination of business rates and central government grants.
By the 2024-25 financial year, councils will have seen a 27% fall in spending power for local services since 2010, external, according to the Local Government Association (LGA). Labour has promised £2bn of central government funding for English councils in the year from April 2025, an extra £700m on top of the £1.3bn announced in October's Budget.
It says cuts in central government grants, rising inflation, higher energy costs and increases to the National Living Wage are all factors. But £515m of that has already been earmarked to offset the rise in employers' National Insurance (NI) contributions which also takes effect in April.
Nottingham City Council said reduced government funding was one of the reasons it had to approve hundreds of job losses and cut social care and youth services. Separately, the government is consulting on directing more money to deprived councils in England from 2026, as part of a wider shake-up of council financing.
Its leader David Mellen told the BBC £100m had been taken from its budget "each and every year in the last 10 years", external. According to the IFG, central government funding for local authorities in England fell by 10.2% between 2009-10 and 2021-22, external.
At the same time, councils have had to deal with inflation, higher energy costs and increases to the National Living Wage.
Councils fear the local is being taken out of local government
Council shake-up sees elections delayed in nine areas
What happens when a council goes 'bankrupt'?What happens when a council goes 'bankrupt'?
Councils don't technically go bankrupt, but if they can't balance the budget for the financial year, they can issue what's called a section 114 notice, external. Councils cannot technically go bankrupt, but if they cannot balance the budget for the financial year, they can issue what is called a section 114 notice., external
This means they can't commit to most new spending, and residents could see cuts to services, such as reducing the number of bin collections or dimming streetlights. This means they cannot commit to most new spending, and residents could see cuts to services, such as reducing the number of bin collections or dimming streetlights.
Before 2018, only two councils had issued a section 114. Since then, there have been more than 10 such notices Before 2018, only two councils had issued a section 114. Twelve have been issued since, external.
One in five English councils say that it is in danger of going bankrupt, according to the LGA. Birmingham City Council went bust in 2023, with a £760m black hole. It followed Woking Council, Thurrock and Croydon (for the third time).
A number of authorities in England have not issued section 114 notices but are receiving exceptional financial support, external to manage financial pressures. Research by the LGA in 2024 found that one in four English councils said they were in danger of going bust in 2025-26 or 2026-27, external.
Middlesbrough Council, for example, is one of 19 authorities that has permission to borrow money to fund day-to-day spending in 2024-25. A number of authorities in England have not issued section 114 notices but are receiving so-called "exceptional financial support", external to help manage their budgets.
Birmingham City Council went bust in 2023, with a £760m black hole. It followed Woking Council, Thurrock and Croydon (for a third time). Middlesbrough Council, for example, is one of 19 authorities that was given permission to borrow money to fund day-to-day spending in 2024-25.
Why do councils go bust and what happens when they do?Why do councils go bust and what happens when they do?
Vital services or financial ruin? England's town hall dilemmaVital services or financial ruin? England's town hall dilemma
What happens if you can't pay your council tax? What happens if you cannot pay your council tax?
Don't just stop paying - councils may take legal action to reclaim the money. Do not just stop paying - councils may take legal action to reclaim the money.
Instead, contact the council and explain the situation, Citizens Advice suggests, external. Instead, contact the council and explain the situation, Citizens Advice suggests., external
You might be able to pay less council tax or not pay it at all depending on your circumstances.You might be able to pay less council tax or not pay it at all depending on your circumstances.
Which debts and bills should I pay first?Which debts and bills should I pay first?