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Four million pensioners face council tax hike as single-person discount under threat

September 7, 2024

More than one in ten adults have stopped contributing to their company pension or are planning to stop because their incomes have been squeezed by the cost of living crisis.

Millions of pensioners living alone could be hit with higher council tax bills if Housing Secretary Angela Rayner scraps the 25% single occupier discount, potentially compounding financial pressures as they also face losing winter fuel payments.

Analysis reveals that around half of the 8.4 million people affected by the potential abolition of the single-person council tax discount are retirees. The discount currently reduces the average Band D council tax bill by approximately £543 per year and saves the public purse about £3 billion annually, according to the Institute for Fiscal Studies (IFS).

Angela Rayner, who did not rule out removing the discount this week, is under fire for the potential impact on older people, many of whom are already struggling with rising living costs. The announcement follows Chancellor Rachel Reeves’s decision to means-test winter fuel payments, which previously provided up to £300 to around 10 million pensioners, aiming to save £1.4 billion for the Treasury.

Jan Shortt, general secretary of the National Pensioners Convention, criticised the potential removal of the discount, calling it an “unforgivable betrayal” of older people that could force them to give up their homes. “It seems older people, who have no voice in parliament, are seen as easy targets,” she said.

Graham Stuart, a Conservative MP, echoed these concerns in the House of Commons, highlighting the strain on pensioners who are losing both their winter fuel payments and council tax discounts. “That is taking hundreds of pounds from those that can least afford it. We cannot have such an unnecessary impact on pensioners,” he said.

Speaking in the Commons, Rayner assured there were no current plans to increase council tax, but did not commit to keeping the single-person discount. When pressed on the issue, she responded, “This Government is about making sure that working people are better off, and we intend to do that.”

Data from the Ministry of Housing, Communities and Local Government shows that around 8.4 million homes in England benefit from the 25% discount for single occupants, with an additional 253,000 households qualifying due to other residents being disregarded for council tax purposes. Figures from the Office for National Statistics (ONS) indicate that half of those living alone are aged over 65.

The largest number of single-person households eligible for the discount are found in Birmingham, where 152,000 people benefit from the tax saving. Other top hotspots include retiree-friendly rural areas such as Cornwall, Somerset, and North Yorkshire. As the UK’s population ages, the number of people living alone is rising, with an 8% increase in single-occupant households recorded over the past decade.

Caroline Abrahams, charity director at Age UK, warned that older people living alone already face significant challenges with fixed household costs that do not diminish for single occupants. She stated, “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.”

A spokesperson for the Housing Department maintained that the government currently has no plans to reform council tax, but the potential changes have already sparked concern among pensioner advocacy groups and MPs alike.