Autumn Budget: Council tax could rise above £2,000 per year for the first time

Credit: PA

Council tax bills could jump above £2,000 a year for the first time after it was announced that local authorities in England would be given "additional flexibility" to change council tax levels.

Chancellor Jeremy Hunt's Autumn Budget will allow local authorities to increase council tax by up to 5% a year from April 2023 without a referendum - 3% for all local authorities and an additional 2% for local authorities with social care responsibilities.

Previously, councils could only raise council tax by 2.99% without holding a local referendum.

"This will give local authorities greater flexibility to set council tax levels based on need, resources and priorities of their area, including adult social care," the budget states.

Chancellor Jeremy Hunt. Credit: PA / House of Commons

The chancellor skimmed over the changes to council tax rules during his speech in the House of Commons today, referring to it as "flexibility" for councils.

This "flexibility", he said, could partially fund up to £2.8 billion next year and £4.7 billion the year after for the social care sector.

The shadow chancellor, Rachel Reeves, said the chancellor “seems to have confirmed today a council tax bombshell”. She said: “The government is forcing local councils to put up council tax. Now the chancellor seems to have confirmed today a council tax bombshell worth £100 for a typical band D property, taking their council tax above £2,000 for the first time.”

She said people “will be forced to pay more because of the destruction that the Conservatives have reaped on our economy”.

Tweeting ahead of the budget, Labour's Chris Bryant referred to a rise in council tax to fund social care "madness".

As council tax rates for each band vary depending on location, the middle band - Band D - is usually used to calculate the average cost of council tax.

For the 2022-23 tax year, the average Band D council tax in England is £1,966, but as the tax could now rise by 5%, this could increase to around £2,064 next year.

That is a potential increase of £98 a year for the average Band D household in England.

However, in England council tax bands A to C account for over half of all dwellings, according to the government.

This means the average council tax per dwelling is lower than the average Band D council tax, with an average of £1,493 per dwelling in 2022-23.

With a 5% hike, this would rise to £1,567.50 - an annual increase of £74.50.

Current council Tax bands and rates. Credit: Lambeth Council

How does council tax work?

Each household pays an annual fee to their local authority known as council tax.

The amount which you pay is decided by the council you fall under, and is used to help fund local services, such as police and fire services, leisure centres and libraries.

If you live in England or Scotland you will fit into one of eight council tax bandings.

Which band you fit into is based on a property's rateable value - the more expensive the property, the higher the council tax band.

Wales has nine bands where the same system is applied to determine the banding a property falls under.

The higher the council tax banding a property fits into, the more costly the rate of council tax.

So, how much you pay will depend on two factors - the area you live in and the council tax banding of your property.

You may also be receiving a discount if you live on your own or have a disability.

If you're unsure how much you currently pay out in council tax you can check by using the following links:

What is council tax used for?

Council tax helps to fund:

  • Education

  • Sport centres

  • Rubbish and waste collection

  • Transport and highways

  • Environmental health and trading standards

  • Administration and record-keeping, such as marriages, deaths and birth, and local elections

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