Council Tax Rises 2026/27: Why Bills Are Increasing Across England

Council tax is rising again in 2026/27. The average council tax bill across the London area is now £2,068, up 4.4% (£87) on last year, compared with £2,392 nationally, an increase of 4.9%.

Across the UK, many councils approved council tax increases of up to 4.99% in 2026/27. However,  of London’s 33 boroughs, 29 raised council tax by the maximum allowed this year, with only a handful setting smaller increases. 

In this article, Real Estate Agents London explains which councils are winners or losers after the funding announcement, and what is the impact on the tax rate?

What Does Council Tax Rise Mean?

This refers to annual increases in local property taxes, primarily in the UK, because of budget pressures such as social care costs and funding shortfalls.

Why Council Tax Keeps Rising Despite Government Funding

Even where councils receive money year on year, several pressures keep the council tax rising each year due to:

Rising Cost of Local Services 

Higher staff wages and growing demand for services all increase with inflation, so extra funding often gets swallowed up before it improves anything. 

Adult Social Care Demand

Councils responsible for social care can add up to 2% to your bill. In 2026-27, 142 councils used all of that extra 2%, and another 11 used part of it. Together, this adds about £35 to the average bill.  

Referendum Principles

The government sets an upper limit each year that councils can raise tax to without holding a public vote. Rather than staying below it, most councils go right up to that limit. This year, 274 out of 384 councils raised bills by the maximum amount, and another 50 came close. 

Uneven Distribution of Funding

Some councils get more government money than others, based on things like local deprivation and need. Where funding falls short of what a council needs to run its services, council tax usually rises to cover the gap. 

Being a landlord, it’s worth worrying that rising council tax may eat into your rental income. Our Guaranteed Rent Service gives you a fixed rental income regardless of void periods or unexpected expenses.  

Recent Government Funding Announcements And Their Impact On Council Tax Rises

The UK Government has announced a Three-year Local Government Finance Settlement, providing £83.5 billion in funding for English local authorities in 2026/27, increasing to £90.5 billion by 2028/29.

Multi-Year Funding Settlement

The Government’s three-year funding settlement increases financial support for councils between 2026/27 and 2028/29.  

Purpose Of The Government Funding

The new funding aims to: 

1. Restore local services overall, such as libraries, youth centres, and community hubs.
2. Replace the outdated funding system with a fairer and need-based approach.
3. Provides financial certainty to councils, enabling them to plan budgets more effectively.

Which Councils Will Receive More Funding?

All Councils will not receive the same funding, as it is based on factors such as local needs and deprivation levels.

Northern and Deprived Areas

Most deprived councils will receive 23-24% more funding than less disadvantaged areas. They can improve services with this extra money, such as housing, social care, and community support.

London and Southern England

London boroughs and southern councils may receive additional funding to cover the higher costs of living in the UK, staffing, and service delivery. Authorities struggling with rising demand for adult social care, children’s support, and community programs also receive extra financial support. Due to higher operating and staffing costs, many developments in London benefit from structured Residential Block Management to maintain service standards despite rising council tax bills.

Can Councils Raise Council Tax By More Than 4.99%? 

Most councils can raise council tax by up to 4.99% each year (up to 2% for adult social care, plus up to 2.99% for general spending) without triggering a local referendum. Increases of 5% or more require councils to hold a public vote. 

For a year, 2026-27, seven councilswere given government permission to go further, through a process known as Exceptional Financial Support, usually because of a serious budget shortfall or long-term structural deficits. 

Key Takeaway: All of the above councils are granted permission to exceed 4.99% cap for 2026-27. Every London borough stayed within the standard 4.99% referendum threshold this year.

How is Council Tax Calculated?

Council Tax rises can be calculated based on these key factors:

1. Annual Increase Limits: Councils can raise council tax by 3% each year, plus an extra 2% for adult social care.
2. Property Bands: Homes are placed into bands (A-H) based on their values, which can affect how much tax you pay.
3. Local Council Decisions: Each council sets its final tax rate within the government’s referendum threshold.

Conclusion

The Government’s Three-Year Funding is designed to provide financial stability and support deprived areas by improving their local public services through councils. However, rising service costs, inflation, and growing social care demand mean that many councils are still facing budget pressures. 

As a result, Council Tax Rises cannot be avoided in the coming years. Furthermore, homeowners, landlords, and leaseholders can reduce day-to-day operational costs and manage budgets efficiently with the help of Property Management Services.

Frequently Asked Questions