The government have announced a new measure which will give local councils in England more opportunity to set council tax according to the needs of the area. This change could mean households in council tax band D could see an increase of almost £250 but the 2027-28 tax year, according to stats from the Office for Budget Responsibility (OBR).
Currently, councils can only set tax in line with that laid out by the government. Any authority who wants to raise bills above the limit set by the government must hold a referendum and get the backing of the residents in that particular area.
Councils in England can currently increase council tax by 2.99% per year if they provide social care. Councils that do not provide any form of social are can increase taxes by 1.99% annually.
From 2023, however, the government has said they will give councils a great ability to set their council tax needs based on need and the resources available to them. Councils providing social care will be able to increase council tax by 5%, with other councils being given the opportunity to add an extra 3% to people’s bills. This will be able to be set in place by authorities without a referendum needing to be held.
According to the Treasury, 95% of councils are likely to implement a 5% rise for the residents within the area.
Of course, the money generated from council tax increases will differ between geographical locations. Areas with higher bills and more expensive properties will be able to raise more money, thus the council in those areas being able to achieve more with this greater funding.
What does council tax go towards?
Council tax mainly funds local services and needs. This can range from funding waste collections and street lights to public libraries, parks and recreational facilities. Police and fire services are also funded by council, tax. A majority of councils within England and across the UK rely heavily on council tax.
In fact, this is the main source of income for many local authorities. Some councils receive more than half of their funding from council tax.