Amid the warnings from the government that a difficult budget is on its way in October, one policy rumoured to be under consideration is ending the single person discount for council tax.
Sir Keir Starmer refused to rule out the change when asked about it during prime minister’s questions (PMQs) on Wednesday, saying he would not “pre-empt the budget.”
When No 10 was later asked about the discount – which reduces council tax bills by 25% for taxpayers who live alone – in response to the prime minister’s non-committal answer, a spokeswoman also refused to give any indication whether it was on the chopping block.
What we know
The issue first came into the spotlight at the start of September when deputy prime minister Angela Rayner was quizzed about the discount in the House of Commons in light of other expected spending cuts in the budget.
Rayner, who is also housing and local government secretary, was asked by the Conservative former minister Graham Stuart if Labour planned to scrap the discount. He described as “so important” to pensioners, especially after millions were told in recent weeks that they will not receive the winter fuel payment worth up to £300 this year.
Rayner did not commit to keeping it in place, instead saying it was “astonishing” that after “running down the economy” while in government, the Tories were now trying to claim Labour are “about raising taxes”.
“This government is about making sure that working people are better off and we’ll intend to do that,” she said.
The issue was raised in the Commons for the second time during this week’s PMQs, when the prime minister was asked by Tory backbencher Louie French if the single-person discount was being scrapped.
Starmer responded: “I am not going to pre-empt the budget. It will all be set out in due course.”
Any change to the benefits the elderly receive will likely be hotly contested after the recent fight the government faced over the means-testing of the winter fuel allowance.
Caroline Abrahams, charity director at Age UK, said: “If the single person discount for council tax was abolished, many pensioners—particularly widows—could find their finances severely strained, especially if they also lose their Winter Fuel Payment.”
Consumer champion Martin Lewis added in a post on X that any substantial council tax changes shouldn’t be made without homes being rebanded. “Up to 400,000 homes are in the wrong band because we still rely in Eng & Scot [England and Scotland] on a stop-gap temporary valuation done in 1991 to dictate what bands people are in,” he wrote on X.
“If such a big change comes, surely there should be even more emphasis on ensuring that people are in the right band and not overpaying.”
According to the Your Money finance website, 8.39 million households in England received the discount in 2023 and 34% would be affected if the discount were to be scrapped.
What we don’t know
Any rumours to scrap the discount remain just that at the moment – rumours.
The department of housing has previously said there are currently has no plans to reform council tax.
In the run-up to the budget, on 30 October, the media and politicians usually get a clearer picture of measures that are due to be announced, but that is still some way away.
However, the new government has repeatedly warned the budget will contain painful measures and tax rises that are necessary to plug a financial black hole they claim they inherited from the previous administration.
The Labour Party has ruled out increasing any of the big three taxes, income tax, national insurance and VAT, which, according to the Institute for Fiscal Studies, makes up around 63% of the government’s tax revenue. This means tax changes will be limited to a much smaller part of the total income pie.
Besides from not increasing the big three taxes the government has so far been tight-lipped on what it expects to change. Tweaks to inheritance tax and the tax-free lump sum on pensions are rumoured to be being considered.
The Conservatives argue much of the overspend has been caused by Labour’s decision around public sector pay.
What is the single-person discount?
The single-person council tax discount gives people a 25% discount on their council tax bill when they live on their own. It can save single households anywhere from a few hundred pounds to over £500 per year depending on what band they live in.
It is estimated it costs local authorities around £3bn a year and it is believed they have been lobbying the government to ditch the discount.
Of the 8.4 million homes that are entitled to the relief, over half of the beneficiaries over 65.
Who is eligible?
The only requirement is that you can prove you live on your own in a property that pays council tax. Councils will run checks with third-party sources to make sure that no-one else is living at the property even if only one person is registered to pay the bills.
If you’re a single parent then you also qualify for the discount as long as your child or children are below the age of 18.
