Budget 2021: this is how much Council Tax could rise

A look at how much Council Tax could rise following the release of the 2021 Autumn Budget and tips on how to cut your bill.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Following the announcement of the 2021 Autumn Budget, fiscal watchdog, the Office for Budget Responsibility (OBR), has revealed that UK households could see their Council Tax bills rise significantly in the next few years.

So how much could Council Tax go up? And is there any way you can cut your bill? Let’s find out.

[top_pitch]

Budget 2021: Is Council Tax rising?

According to the OBR’s Economic and Fiscal Outlook, total Council Tax receipts will hit £48.4 billion in 2026/2027, up from £36.3 billion in 2019/2020. This represents a 33% increase, or £12.1 billion and translates to about £435 extra per household.

The OBR’s follows the government’s confirmation in the 2021 Autumn Budget that local authorities will be able to raise Council Tax by a maximum of 3% without having to hold a referendum, with 1% of this going to social care.

As reported in The Telegraph, the Institute for Fiscal Studies (IFS) found that a 3% increase could see the average bill, which currently stands at £1,428, rise by £39.92 next April.

However, funding pressures on many local councils means that increases of more than the 3% announced in the 2021 Budget could be on the cards in the coming years.

[middle_pitch]

Can you reduce your Council Tax bill?

Council Tax is steadily increasing to help meet rising social care costs. Last year, councils were able to raise taxes by a staggering 5%.

Though the increase this year will be less given the 3% cap, it could still be significant. Given that other tax hikes, such as a 1.25% increase on National Insurance, are on the horizon, the impact on Brits’ budgets could be huge.

If you are concerned about rises in Council Tax and how they could affect your finances, the good news is that there are ways to cut your bill.

1. Challenge your Council Tax band

It is estimated that hundreds of thousands of properties in the UK could be in the wrong band. That means that a lot of people could be paying more Council Tax than they need to.

If you think you might be in the wrong band, you might want to consider launching a challenge. If successful, you could get a refund worth thousands of pounds in addition to seeing your bill reduce significantly every year.

The MoneySavingExpert website has a comprehensive step-by-step guide on how to check whether you qualify for a refund.

If your check confirms that you are in the wrong band, you can make a challenge through the Valuation Office Agency (VOA). 

2. Apply for a Council Tax reduction

You could qualify for a Council Tax reduction if you are on a low income, claiming certain benefits or caring for others, among other circumstances.

If eligible, your bill could be cut by between 25% and 100%, meaning that there is a chance of avoiding Council Tax entirely.

To find out whether you are eligible for a Council Tax reduction, contact your local council

3. Get a Council Tax discount

You could be eligible for a Council Tax discount that would reduce the Council Tax you pay. For example, if you live alone or with people considered ‘disregarded’, you could get a 25% discount.

If everyone in a particular residence is ‘disregarded’ you will get a 50% discount. Those considered to be ‘disregarded’ include but are not limited to:

  • Apprentices
  • Full-time students
  • Carers 
  • People who are severely mentally-impaired
  • People living in care homes
  • Resident hospital patients

To see what kind of discount you could qualify for, check with your local council.

Please note that tax treatment depends on your individual circumstances and may be subject to change in the future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

More on Personal Finance

Note paper with question mark on orange background
Personal Finance

Should you invest your ISA in a model portfolio?

Which model ISA portfolios offer both high performance and low fees? Hargreaves Lansdown, Interactive Investor and AJ Bell go under…

Read more »

Economic Uncertainty Ahead Sign With Stormy Background
Personal Finance

Is it time to exit emerging markets investments?

Investors may well be sitting on losses from emerging markets funds. Is it worth keeping the faith for a sustained…

Read more »

Personal Finance

Share trading? Three shares with turnaround potential

Share trading has been difficult in 2022, but which companies have turnaround potential? Jo Groves takes a closer look at…

Read more »

Man using credit card and smartphone for purchasing goods online.
Personal Finance

Revealed! Why Gen Z may be the savviest generation when it comes to credit cards

New research reveals that Gen Z may be the most astute when it comes to credit cards. But why? And…

Read more »

Environmental technology concept.
Personal Finance

The 10 best-performing sectors for ISA investors

The best-performing sectors over the past year invested in real assets such as infrastructure, but is this trend set to…

Read more »

Road sign warning of a risk ahead
Personal Finance

Recession risk ‘on the rise’: is it time for investors to worry?

A major global bank has suggested the risk of a recession in the UK is 'on the rise'. So, should…

Read more »

pensive bearded business man sitting on chair looking out of the window
Personal Finance

1 in 4 cutting back on investments amid cost of living crisis

New research shows one in four investors have cut back on their investing contributions to cope with the rising cost…

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Personal Finance

The 10 most popular stocks among UK investors so far this year

As the new tax year kicks off, here's a look at some of the most popular stocks among UK investors…

Read more »