Potential Council Tax Hike Looms for Single-Person Households in England

In England, single-person households, particularly widows and pensioners, may face a substantial increase in council tax if the current 25% single-person discount is eliminated. This potential change has sparked concerns about its impact on vulnerable populations and raised questions about the fairness of local taxation.

According to analysis by the TaxPayers' Alliance (TPA), the average council tax in England increased by £106 last year. However, if the single-person discount is scrapped, single occupants could see their bills rise by £549 in the coming year. This significant jump has led to the controversial label of "widows' tax" for the proposed change.

Keir Starmer, the Prime Minister, has not ruled out the possibility of removing the single-person discount, stating that all options are being considered for the upcoming Budget on October 30, 2024. This stance has fueled speculation about potential tax increases and their impact on different demographic groups.

The single-person discount, introduced alongside council tax in 1993, was designed to reflect the lower usage of council services by single-occupant households. Council tax, which replaced the Community Charge, is based on property values from 1991 in England and Scotland, a fact that has led to criticism of the system's outdated foundations.

The TPA's analysis reveals that scrapping the discount could raise £5.4 billion in the UK, with £1.9 billion coming from single pensioners alone. This amount surpasses the £1.5 billion expected to be raised by cutting the winter fuel allowance, another controversial measure under consideration.

"We've got to look at everything in the round."

The impact of such a change would vary across regions, with some areas facing more severe consequences. In Rutland, where Band D council tax rates are £2,543, single residents could lose a discount worth £636. Twenty English councils could see increases exceeding £600 for single occupants if the discount is eliminated.

It's worth noting that council tax accounts for approximately 5% of total UK tax revenue, and the country has one of the highest property tax burdens among OECD nations. In 2022, the average annual council tax bill in England was £1,966, highlighting the significant financial obligation already placed on households.

Critics argue that removing the single-person discount would disproportionately affect vulnerable groups, including the 3 million pensioners living alone in England. Additionally, 1.6 million single parents with dependent children currently benefit from this relief, and its removal could raise an additional £983 million.

As the debate continues, it's important to consider that council tax rates can vary significantly between local authorities. Some councils offer additional discounts for specific groups, such as disabled residents, which could further complicate the impact of any systemic changes.

The potential council tax hike comes at a time when the UK's tax burden is projected to reach an 80-year high by 2028-29. This trend, combined with the regressive nature of council tax, has led to increased scrutiny of local taxation systems and calls for comprehensive reform.

As the October 30 Budget approaches, many single-person households, particularly pensioners and widows, await the government's decision with apprehension, hoping for a resolution that balances fiscal needs with fairness and consideration for vulnerable populations.