New analysis has revealed that the UK’s lowest-income households are increasingly spending a larger portion of their income on council tax, drawing comparisons to the controversial poll tax that played a role in the downfall of former Prime Minister Margaret Thatcher.
According to research findings, the poorest fifth of households in England, Wales, Scotland, and Northern Ireland allocated 4.8% of their income to council tax and domestic rates during the 2020-21 financial year, a sharp rise from 2.9% in 2002-03.
Council tax remains one of the few levies on wealth in the UK, though it operates under different systems in each of the four nations. Despite its role in funding local government, economists have long criticized the structure of council tax, particularly in England and Scotland, where rates are based on outdated property valuations from 1991. While Wales updated its system in 2003 and Scotland increased rates for higher-banded properties in 2017, Northern Ireland continues to use a domestic rates system that predates council tax altogether.
Experts warn that council tax has become increasingly regressive, placing a disproportionate burden on those with lower incomes. The analysis highlights that the lowest-earning households pay three times more of their income toward council tax (4.8%) than the wealthiest households, who contribute just 1.5%.
One of the key reasons for this rising burden is the abolition of council tax benefit in 2013 under the Conservative-Liberal Democrat coalition government. Since then, many areas have gradually removed rebates that once eased the financial strain on lower-income families.
This shift has, in effect, recreated the very issues that led to widespread opposition to the poll tax. Initially introduced as a flat-rate community charge in the late 1980s, the poll tax was met with intense public resistance, culminating in mass protests, including a major riot in Trafalgar Square. The backlash played a significant role in Thatcher’s resignation in 1990, and her successor, John Major, replaced the system with council tax in 1993 as a more progressive alternative.
The growing financial strain of council tax has intensified scrutiny in recent years, particularly as multiple councils in England have declared effective bankruptcy due to increasing spending demands, especially in social care.
Research indicates that this trend is set to continue, with council tax bills in England expected to rise by as much as 4.99% over the next year. Six local authorities—Bradford, Newham, Trafford, Windsor, Maidenhead, and Somerset—have been granted permission to raise council tax by up to 9.99%, further fueling concerns over affordability for struggling households.
Economic experts argue that without fundamental reform, council tax could become an even greater financial burden for lower-income families, exacerbating economic inequalities across the country.
For more updates on the rising financial strain of council tax and its impact on low-income households, visit London Pulse News.
