How to deal with 2026 council tax bill increases and arrears

There are some very real funding gaps for local governments around England. 

The cost of running everyday services has jumped as inflation has pushed everything higher. And at the same time, the cost of adult social care, homelessness support and special educational needs and disabilities (SEND) provisions are through the roof. Grants from Westminster simply aren’t enough to cover this, so one of the few levers councils have left to pull is council tax. 

Which councils are increasing council tax?

If you mouse over the map below for 2025/2026 Band D rate increases, almost every local government in England has pushed right up against the maximum increase they’re allowed to make without special exemptions – typically 5%, unless further increases are put to the people in a local referendum. There hasn’t been one of those anywhere in England since Bedford in 2015.

Instead, councils make their case to central government in applications for those special exemptions. Somerset is a good example. Laying bare its financial crisis last year, it received exceptional permission from the Secretary of State to lift its rates by around eight percent. Our analysis of government data shows 33 councils – more than a fifth – increased this band of council tax by more than five percent last year. These “exceptional” approvals are starting to feel less exceptional, and council tax increases over five percent are slowly becoming the norm. 

In 2026, even more unprecedented council tax increases have been announced:

Where do the council tax increases take us? 

The average council tax rate in 2026/2027 cannot be known for sure as councils are still announcing rates. But the average 2025/2026 rate was £1,800 per year. 

Assuming a 5% rise, plus those higher outliers, the precise weighted national increase comes out at 5.27%. That means the average bill in 2026 will be roughly £1,895 – around £95 more year on year. 

The knock-on effect: council tax arrears increase

Unfortunately, something has to give, and the domino effect of council tax increases is that more households are going to fall behind. If you’ve ever wondered how many people can’t pay up, consider this  – across England, unpaid council tax has now climbed to around £6.6bn (as of March 2025). This is the highest amount on record and roughly 10% higher than a year earlier. 

The map below shows what each local authority is owed in unpaid tax (much of it will have to be written off). The numbers reach the millions in part because of the persistently high cost of living, but also because council tax is not means-adjusted for income. It’s based on property bands set all the way back in 1991. That means two families in similar homes pay the same bill even if their earnings look completely different. Lower-income households are disproportionately affected.

Does council tax increase per person?

No, council tax is not charged per person who lives at an address. It’s charged per property, which is based on valuations back in 1991 (unless successfully challenged). However, there are discounts. If you live alone, you can usually claim 25% off your bill. And if a property is vacant following the death of the occupant you can get a six-month council tax exemption.

How to deal with increases in council tax

If you’re worried about your council tax bill, some financial housekeeping can go a long way.

The best place to start is with checking you’re actually paying the right amount. People have claimed back thousands of pounds after discovering their properties were in the wrong tax band. 

35 years have passed since the government last banded properties according to their market values. It’s assumed that properties valued in the top bands then will also be in the top bands now, but of course, that often proves a flimsy assumption. The 1991 valuation was a rush job, in some cases with valuers marking property bands on a clipboard from inside a moving car. And in the years since, the surrounding areas of many homes have transformed in very important ways. For example, with noise pollution from new roads and runways, and with building developments that obstruct views.

These are good reasons for bands to be lowered. The government’s council tax band lookup tool allows you to compare where you live to neighbouring properties and challenge your band. 

It’s also worth exploring council tax reductions (CTRs). For example, if you’re the only person living in the household, you’re eligible for the single-person CTR of 25%. Depending on your circumstances, you may also be eligible for a disability reduction or student exemption. If you’re on Universal Credit, that should almost completely wipe out council tax. 

If you want to be better at handling money in general, a wealth manager like Charles Stanley can support you with tips for budgeting and advice around long-term financial planning. Having an emergency fund means an unexpected increase doesn’t immediately turn into debt or arrears.

We’ve put together a guide to building a solid emergency fund here. 

And if you’re already struggling, call your local council and let them know. They’d much rather agree a new repayment plan than see you go into arrears. You can often spread payments over 12 months instead of the usual ten, which lowers each instalment and makes things feel more manageable.