Households across the UK face a council tax rise of up to 5% in 2025-26, expected to add around £110 per year to the average bill.
This increase, part of a new £1.8 billion tax initiative confirmed by the Government, contrasts with the comparatively low council tax rates paid by Prime Minister Keir Starmer and Chancellor Rachel Reeves at their official residences.
While the typical Band D household currently pays £2,171 annually, residents at Number 10 and Number 11 Downing Street are reportedly billed £1,946, despite the properties being classified under Band H, the highest tax band.
In other regions, like Rutland, Nottingham, and Dorset, a Band D property incurs council tax of over £2,500 each year. Under the new 5% cap, these homeowners would see a £125 rise, compared to a £97 increase for the Prime Minister’s residence.
The council tax system is based on eight property bands, with charges varying by council.
For instance, Band H residents in Durham’s Easington Colliery pay more than double their Westminster counterparts, exceeding £5,000 annually. Under the 5% increase cap, these households could face an additional £250 each year.
The Government’s decision to maintain the 5% cap aims to generate £1.8 billion in additional revenue. However, councils requiring larger hikes must seek government approval or hold a local referendum.
According to a recent survey by the Local Government Association, one in four councils anticipates potential bankruptcy within two years without emergency funding, with many likely to raise rates to the maximum permitted level.
The discrepancy between council tax rates has reignited criticism of the current system, which is based on property valuations from 1991.
Critics argue this framework unfairly benefits higher-value properties in affluent areas like Westminster, where council tax equates to 0.06% of average property values, versus 1.31% in areas like Hartlepool, according to analysis by Fairer Share, a group advocating council tax reform.
John O’Connell from the TaxPayers’ Alliance argued that while a 5% cap may temporarily curb rate increases, “inflation-busting hikes” are inevitable.
He added, “It is shocking that many politicians, including the Prime Minister, are shielded from these rises.”
Fairer Share’s Andrew Dixon highlighted the inequities of the system, noting, “It is unacceptable that households in areas with lower property values and incomes, like Hartlepool, bear a disproportionately higher council tax burden than those in Westminster. The outdated structure needs urgent reform to address these systemic inequalities.”
The Ministerial Code mandates that ministers pay personal taxes, including council tax, on any property deemed their primary residence, ensuring they meet all tax obligations on official residences.
With cost-of-living pressures mounting, critics call for swift changes to address what they see as the “regressive” nature of council tax and to deliver fairer distribution across the UK.
