Council tax bills rise by 5% for third year in a row as cost pressures bite

Council tax bill rises will hit 5% in April for the third year in a row, as almost all councils increase bills up to, or close to, the maximum permitted, Government figures confirm.

The average annual band D bill, the standard measure of council tax, will be £2,280 including all precepts this year, an increase of £109 on 2024-25 and 20% rise on 2021-22, when the average bill was £1,898.

With 384 lower and upper tier councils subject to referendum principles, which allow them to raise the levy by 4.99% without triggering a local referendum, 293 opted to hit the threshold and 56 chose to go close to the maximum.

This means 91% of councils felt it necessary to impose significant increases, to cover growing cost pressures and rising demand for support services not provided by direct government grants and other revenue.

Council tax bills on average have increased by 5.1% in the previous two years.

Of the 153 councils with social care responsibilities, 147 imposed the full 2% adult social care precept, with the remaining six applying some of the precept.

There is variation in average council tax bills across different types of councils.

In London boroughs, the average council tax bill will be £1,982 – an increase of £89 or 4.7% on last year.

This means households in the capital will have the lowest average bills and the smallest cash increases in 2025-26.

Meanwhile, metropolitan areas outside, which include many less affluent areas in the Midlands and the north of England, will have the largest percentage and cash increase of 5.6% and £121 respectively, taking bills to £2,289.

Unitary areas, which tend to be larger and do not include lower tier districts, will have the highest average bill of £2,366, an increase of £118 (5.2%), while households in shire counties will see a 4.8% increase of £106, taking bills to £2,344.

The overall council requirement calculated for all councils in England in 2025-26 is £44.1 billion, a jump of £2.9 billion, or 7.0%, on 2024-25 levels.

This requirement has rise by 28% since 2021-22 when the figure was 34,437.

Average area band D council tax ranges from £998 in Wandsworth, south London, to £2,671 in Rutland, with 73% of authorities having an area average band D between £2,200 and £2,500.

Shadow local government secretary Kevin Hollinrake said: “This Labour government is driving up costs for councils across the country with their jobs tax.

“It’s no surprise they have raised council tax by 5%, with the highest increases by Labour and Liberal Democrat councils.

“We are the only ones standing up to a dreadful Labour Government determined to crush businesses, raise your taxes and trash the economy.

“This has been engineered by Labour, who have left town halls to foot the blame when record bills hit the doormat. Vote Conservative on May 1 for a vote against (Prime Minister) Keir Starmer.”

In response, a Ministry of Housing, Communities and Local Government spokesperson said: “We are under no illusion about the scale of financial issues facing councils we inherited and our work is under way to fix the foundations and bring long-term stability to the sector.

“And while councils are ultimately responsible for setting their own council tax levels, we have been clear that they should put taxpayers first and carefully consider the impact of their decisions.

“That’s why we are maintaining a referendum threshold on council tax rises, so taxpayers can have the final say and be protected from excessive increases.”

Barry Lewis, finance spokesman for the County Councils Network, said the figures show people living in county areas continue to pay significantly more council tax than those in large towns and cities, with some urban counties able to freeze bills “due to the Government focusing funding on these places at the expense of rural areas”.

He added: “Councils in county areas have lost more central government funding over the past two decades than other parts of the country, leaving them more reliant on council tax to fund vital services such as adult social care, pothole repairs, libraries and special educational needs.

“This is despite councils in county areas seeing demand and costs for adult social care and children’s social care rise more than any other part of England, and this is projected to continue during the course of this Parliament.

Mr Lewis said if the Government permanently focuses funds on urban areas “despite little evidence”, after a forthcoming review of how grants are distributed, counties will be “even more reliant on taxpayers to fund their services”.