Council Tax Increase in England for 2026-27
Council tax in England is set to rise by an average of 4.9% for the 2026-27 financial year, surpassing inflation and adding to existing cost of living pressures, according to newly released data.
The increase will take effect from 1 April 2026 and will result in the average council tax for a Band D property in England rising to £2,392 annually, which is £111 more than the previous year.
The Local Government Association (LGA), representing councils, has indicated that local authorities are under significant financial pressure, necessitating the increase in council tax bills to maintain services.
While many councils are permitted to raise bills by up to 5%, seven councils have received government approval to implement larger increases to address particularly challenging financial circumstances.
For example, Band D council tax bills in Shropshire are expected to increase by an average of 9%, and in North Somerset by 8.6%.
Conversely, the smallest increases are projected in Hartlepool, Middlesbrough, Rutland, and Merton, where bills will rise by approximately 2.5% on average.
Councils with statutory responsibilities to care for vulnerable populations are authorized to raise council tax by up to 5% annually.
Analysis by BBC Verify of the figures reveals that 124 of the 153 councils with social care duties are imposing increases of 4.99% or higher.
With inflation recorded at 3% in February, the average council tax rise will outpace the general cost of living, although further price increases are anticipated in the coming months due to geopolitical tensions involving the US, Israel, and Iran.
Rising Costs and Growing Demand on Local Services
Council tax is a mandatory charge on properties across England, Scotland, and Wales, providing nearly half of the funding for local authorities in England.
This revenue supports a range of local services, including social care, libraries, waste collection, and street cleaning.
Owen Mapley, chief executive of the Chartered Institute of Public Finance and Accountability, noted that councils are contending with increasing costs and heightened demand for services.
"In particular, pressures in services that councils have strict legal obligations to provide, such as adults' and children's social care, special educational needs and disabilities and homelessness are continuing to grow," he said.
Professor Tony Travers from the London School of Economics highlighted the significant portion of council budgets allocated to social care.
"Social care makes up about 65% of all councils spending, it's an enormous part of their budget, driven by demand, and growing as a share of all local government spending," he told BBC Verify.
Smaller councils without social care responsibilities are limited to increasing bills by up to 3%.
Additionally, parish and town councils may levy a charge known as a precept to fund their activities; this charge is not subject to a cap.
Police and fire authorities, as well as combined authorities led by elected mayors, can also raise funds through similar charges, all of which contribute to a household's overall council tax bill.
The LGA has cautioned that while council tax is a vital funding source, it cannot fully resolve the long-term financial challenges faced by councils.
In Scotland, all council tax increases for 2026-27 exceed inflation, with some councils raising the tax by as much as 10%.
In Wales, the average council tax increase will be 4.8%.
Northern Ireland operates a domestic rates system instead of council tax.
Changes to Government Funding Allocation
Beyond council tax, approximately one-third of local authority funding derives from central government grants, with the remainder coming from business rates.
April 2026 will mark the beginning of significant changes in how central government funding is distributed among councils.
The Institute for Fiscal Studies (IFS) thinktank explained that the new system aims to align funding more closely with each council's actual expenditure needs.
"Some councils will see their central government funding increase, others will see it cut," said David Phillips, IFS associate director.
"That will mean the pressure to increase council tax will vary across councils - and it will be interesting to see if the winners from the funding reform put up council tax by less than the losers."
The government plans to allocate £83.5 billion to councils across England for the 2026-27 financial year.
Scotland, Wales, and Northern Ireland manage their own funding arrangements independently.
Additional reporting by Rob England.
