Under the current council tax system, individuals who live on their own receive a 25 per cent discount on their council tax bill.[1] This is applied to the total bill, after any precepts.[2] The discount also applies to households where all other members bar one are ‘disregarded’ – this includes individuals under 18, individuals in full time education, unrelated live-in carers and severely mentally impaired people.[3] Households where every member is ‘disregarded’ receive a larger 50 per cent discount. [4]
Because of this discount, millions of qualifying households – including pensioners and single parents, are able to reduce what they owe in council tax. This is significant as council tax continues to rise. Average Band D council tax increased by £106 or 5.1 per cent in 2024-25, the largest increase in cash terms since 2003-4.[5]
In response to speculation, a spokeswoman for the prime minister refused to rule out removing the council tax discount, though other cuts were ruled out.[6] While such a change would constitute a simplification of the tax system, it would further increase the tax burden, which is already set to reach an 80 year high by 2028-29.[7] This briefing note uses the most recent census data from England, Wales and Scotland to estimate which areas would be most affected if the discount were scrapped.
READ THE BRIEFING NOTE
SEE THE DATA
Key findings
- Removing the discount for single person households would represent a £5.4 billion tax increase affecting up to 10.3 million households.
- £1.9 billion of this tax increase would be on pensioners aged 66 years and older.
- £983 million of this tax increase would be on single parents with dependent children.
- The average increase for a single person household living in a Band D property would be £530, five times the average increase in Band D council tax in 2024-25, which was £106.[8]
- In England, the average increase would be £549.
- In Wales, the average increase would be £515.
- In Scotland, the average increase would be £353.
- Single person households in Rutland would see the largest increase in council tax, £636. This is followed by Nottingham, which would see an increase of £632.
- Council tax for single person households would rise by more than £600 in 20 local authorities, all of which are in England.
- Birmingham would be the local authority most affected, with 174,093 households qualifying for the discount. Glasgow city in Scotland has the next most qualifying households at 148,342.
[1] Gov.uk, How Council Tax works, www.gov.uk/council-tax/who-has-to-pay, (accessed 12 September 2024).
[2] Barking & Dagenham, Your Council tax bill explained, www.lbbd.gov.uk/council-tax/your-council-tax-bill-explained, (accessed 12 September 2024).
[3] Gov.uk, How Council Tax works, www.gov.uk/council-tax/who-has-to-pay, (accessed 12 September 2024).
[5] TaxPayers’ Alliance, TaxPayers’ Alliance responds to new council tax data, 21 March 2024, www.taxpayersalliance.com/taxpayers_alliance_responds_to_new_council_tax_data, (accessed 12 September 2024).
[6] Hymas, C. & Penna, D., Single pensioners face further tax raid from Starmer, The Telegraph, 11 September 2024.
[7] TaxPayers’ Alliance, Tax burden set to rise to 80-year high by 2028-29, 6 May 2024, www.taxpayersalliance.com/tax_burden_set_to_rise_to_80_year_high_by_2028_29, (accessed 12 September 2024).
[8] TaxPayers’ Alliance, TaxPayers’ Alliance responds to new council tax data, 21 March 2024, www.taxpayersalliance.com/taxpayers_alliance_responds_to_new_council_tax_data, (accessed 12 September 2024).