Labour tax raid could target state pensioners living alone for £390 each | Personal Finance | Finance

Four million state pensioners living alone could risk facing the prospect of a £394 average council tax bill hike under “painful” changes which could be put in place in Labour’s next Budget.

There are fears Labour is plotting to smash and grab from single state pensioners by axeing the 25 percent single person council tax discount after Chancellor Rachel Reeves refused to rule out the draconian measures.

Miss 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 and Prime Minister Keir Starmer warned that the upcoming Budget on October 31 would be ‘painful’.

That has led to fears that everything from pensions to capital gains tax and inheritance tax could be targeted. And one such lever that could be pulled 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, 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.

Some state pensioners also qualify for a Council Tax Reduction due to being of state pension age, but this is not automatic and is based on a pensioner’s income, such as whether they qualify for Pension Credit.

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.”