Households in England face £394 council tax bill increase in painful Labour hike | Personal Finance | Finance

Households in England are facing the prospect of a £394 council tax bill hike under “painful” changes that could be put in place in Labour’s next Budget.

Labour Chancellor Rachel Reeves has already warned the UK that her first-ever Budget, to be delivered in October, will try to plug what the Government says is a £22billion black hole left by the previous administration.

Although Labour has promised not to raise National Insurance, VAT or income tax, the Government has refused to rule out any other tax increases.

That has led to fears that everything from pensions to capital gains tax and inheritance tax could be targeted

And one such levy that could be changed is council tax.

The unpopular charge, levied by local authorities, replaced the old poll tax system and is used to fund everything from bin collections to libraries, roads maintenance and social care.

Although the Chancellor has promised not to raise council tax directly, today she refused to rule out scrapping the single-person discount.

Asked in Parliament whether the single-person discount, currently 25 percent off bills for people living on their own or with a zero-rated person like a student, would definitely be kept, Labour’s Deputy Prime Minister Angela Rayner avoided the question.

She said: “I find it astonishing that members opposite, after running down the economy in the way that they have, after the Chancellor had to come to this House to talk about the billions of pounds black hole, that they’re now trying to claim that this Government is about raising taxes.

“This Government is about making sure that working people are better off and we’ll intend to do that.”

Currently, the average council tax bill for an average sized Band D property is £1,578 per year.

A 25 percent discount would take £394 off that bill, meaning bills for single people would go up by £394 if the discount were to be removed.

Prime Minister Sir Keir Starmer said the upcoming Budget on will be “needed for the long-term good”.

He said: “There is a Budget coming in October, and it’s going to be painful. We have no other choice, given the situation that we’re in.

“Those with the broadest shoulders should bear the heavier burden, and that’s why we’re cracking down on non-doms.

“Those who made the mess should have to do their bit to clean it up – that’s why we’re strengthening the powers of the water regulator and backing tough fines on the water companies that let sewage flood our rivers, lakes and seas.

“But, just as when I responded to the riots, I’ll have to turn to the country and make big asks of you as well, to accept short-term pain for long-term good, the difficult trade-off for the genuine solution.

“And I know that, after all that you have been through, that is a really big ask and really difficult to hear. That is not the position we should be in. It’s not the position I want to be in, but we have to end the politics of the easy answer – that solves nothing.”