Households face steep increase in council tax

Average bill will exceed £2,000 a year under Sunak plans to help fund social care

COUNCIL tax will surpass £2,000 for the average household for the first time, under plans by Rishi Sunak.

The Prime Minister and Jeremy Hunt are preparing to allow town halls to raise the levy by 5 per cent without a local referendum.

The move would mean millions of households in Band D face paying up to £100 extra, which would take annual bills above £2,000.

Homeowners in the top Band H could pay as much as £200 extra, with their bills exceeding £4,000.

Councils responsible for social care are allowed to increase their bills by 2.99 per cent, including a 1 per cent levy for social care. If they want to raise bills further, they must hold a referendum.

But under plans to be unveiled in Thursday’s Autumn Statement, the maximum amount councils can raise without a referendum is expected to rise to 4.99 per cent, to help pay for social care. Most councils are expected to take advantage and charge more.

The Conservative Party manifesto in 2019 pledged to keep the veto on large council tax rises, insisting local people would “continue to have the final say”. But a Treasury source said councils needed “more flexibility” to raise money and pointed out that the increases would remain below inflation.

The plan was initially rejected over concerns that it would hit the poorest hardest. However, No10 and No11 will allow councils to raise more money after deciding to raise benefits and pensions in line with inflation.

Yesterday, Mr Sunak dropped his strongest hint that the pensions triple lock will be kept as government policy this week, which would mean millions of pensioners avoiding a real-terms cut.

The Prime Minister said: “I am someone who understands the particular challenge of pensioners. They will always be at the forefront of my mind.” However, he refused to commit to a target set by Liz Truss, his predecessor, to spend 3 per cent of GDP on defence.

On the plane to the G20 summit in Bali, the Prime Minister instead pointed to the UK’S success in hitting the Nato 2 per cent target.

Elsewhere in the Autumn Statement, a raid by Mr Hunt will result in 700,000 families losing child benefit by 2028. The Chancellor is also to freeze the personal tax threshold and the rates at which people start to pay rates of income tax and national insurance until 2028.

The stealth raid means hundreds of thousands will pay tax for the first time or will be dragged into higher rates.

Other thresholds are also expected to be frozen – from the amount at which businesses must register to pay VAT, to inheritance tax, capital gains tax and the pension lifetime allowance.

The threshold for the top rate of income tax is set to be lowered from £150,000 to £125,000.

Council tax bills also include precepts from other authorities such as fire

‘I understand the particular challenge of pensioners. They will always be at the forefront of my mind’

brigades, police forces and parish councils, which increase the bill further.

The tax plan emerged as two of England’s largest Tory-run councils wrote to Mr Sunak warning they may have to declare bankruptcy in the next few months. The leaders of Kent and Hampshire county councils said that they were facing budget deficits “of a scale that has never been seen before”.

In a joint letter to the Prime Minister, Roger Gough, of Kent, and Rob Humby, of Hampshire, said “we cannot sit by and let two great counties sleepwalk into a financial disaster”. The letter asked for urgent help as inflationary pressures and the increased burden in social care left them at “the cliff edge”.

A survey by the Association of Directors of Adult Social Services found that nine in 10 social care directors do not think their area has enough staff or funding to get through winter. Bosses called for more resources to avoid people dying because their care needs are not met.

HUNDREDS of thousands of families will lose their child benefit over the next six years as a result of a stealth raid by Jeremy Hunt.

It means a third of parents will be denied all or part of their child benefit by 2028, up from a quarter at present.

Under current rules, households lose the right to claim child benefit if one parent earns more than £60,000 a year.

This threshold has not been changed for years despite the effects of inflation and earnings growth. The threshold is likely to be frozen until at least 2028.

The Institute for Fiscal Studies (IFS) forecasts that because of high inflation, an extended freeze will mean 700,000 more families will lose some or all their child benefit by that year.

It means that by 2028, around 2.7 million families – a third – will not receive their full child benefit. This compares to one million families – 13 per cent – when the policy was introduced by George Osborne in 2013; and two million families (26 per cent) now.

The payment is worth £21.80 a week for the first child and £14.45 a week for any subsequent one.

The high-income child benefit charge is levied on a household if either partner earns more than £50,000.

As the wage increases above £50,000, the person has to pay a higher charge, cancelling out some of the child benefit. At £60,000, the charge cancels out the benefit completely. Analysis by the IFS, published last month, said: “The high-income child benefit tax charge, introduced in January 2013, means that child benefit is tapered away for families whose highest-income partner has an annual income above £50,000.

“For every £100 of that individual’s income above £50,000, child benefit entitlement falls by 1 per cent.

“This means that if the higherincome partner’s income is below £60,000, then the family is eligible for a partial payment, whereas if income is at or above this amount, the family is not eligible for child benefit.

“These thresholds are frozen in nominal terms, meaning that every year more families lose eligibility for some or all of their child benefit.”

Last night, the IFS said that if the thresholds are frozen again to 2027-28, roughly 200,000 more families would lose their whole child benefit, depending on earnings growth.