UK households set to wake up to £217 council tax hike within weeks

Council tax bills could rise by 5% after the new Labour Party government decided to keep the cap in place. The rise would be almost three times above current levels of inflation and add £100 to average family’s bills, it is feared.

The prime minister’s press secretary said on Wednesday that the threshold by which local authorities can increase bills would “remain the same”. Speaking in the Commons, Sir Keir Starmer said MPs “will know what the arrangements are”.

Later on Wednesday, his press secretary said: “The threshold remains the same.” In the Commons, Conservative Party leader Kemi Badenoch replied: “I think the house would have heard that the prime minister could neither confirm nor deny whether the cap on council tax was being raised.”

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Government statistics show the average band D council tax set by local authorities in England for 2024-25 was £2,171, which represented an increase of £106 or 5.1% on the previous year. For those in the most expensive band H households, last year’s £4,342 bill will increase by £217.

Starmer accused the Tories of leaving local authorities in an “absolutely catastrophic state”. It comes after inflation in the UK has fallen to its lowest level in three and a half years, giving a boost to Chancellor Rachel Reeves as expectations grow for the Bank of England to cut interest rates.

Figures from the Office for National Statistics show the consumer prices index dropped sharply to 1.7%, down from 2.2% in August, in a bigger fall than anticipated in financial markets, driven by lower air fares and petrol prices. Darren Jones, the chief secretary to the Treasury, said: “It will be welcome news for millions of families that inflation is below 2%. However, there is still more to do to protect working people, which is why we are focused on bringing back growth and restoring economic stability to deliver on the promise of change.”