What we know about calls to scrap single-person household council tax discount
Sir Keir Starmer has denied he is "punishment beating " pensioners as he insisted he was not ruling out - nor ruling in - rumoured plans to scrap the 25% single-person household council tax discount.
The prime minister said he would not be drawn on the future of the tax break for people who live alone ahead of Chancellor Rachel Reeves’ Budget on 30 October.
Scrapping the discount would potentially hit some pensioners living alone who have already suffered the loss of winter fuel payments, but - speaking to reporters on his trip to Washington - Starmer insisted he was not punishing elderly Britons.
[Click to expand our brief guide to the single-person discount or skip to carry on reading the article]
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.
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 it as being "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 on 11 September during prime minister's questions, when Starmer 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."
However, the reports have raised concerns among critics, especially in the wake of 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 said 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. "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."
The Local Government Association, which represents councils, has argued that cash-strapped authorities should be given the power to vary the single person discount, which is worth about £3 billion a year.
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 and Starmer was critical of questions about his cost-cutting plans.
"Let’s just try to quash this now," he said on his way to Washington for a meeting with Joe Biden on Friday. "The budget is on October 30. So, between now and then, you are all going to ask me questions, as you did before the election, ‘will you rule out X, Y, Z?’ And knowing that I’m not going to say before the Budget what we’re going to do, you will then write a story saying, ‘refused to rule out X, Y, Z’.
“I’m not going to say before the Budget what we’re going to do.
“That does not mean that I’m ruling in anything that you might be putting to me, it simply means, like every Prime Minister, we’re not going to reveal what’s in the Budget before we get to it.”
However, when it was put to him that Ms Reeves had ruled out other potential cash-saving options such as scrapping free bus passes, TV licences and prescriptions, he said: “We’ve got to look at everything in the round.”
The new government has repeatedly warned the budget will contain painful measures and tax rises that are necessary to plug a £22bn financial black hole they claim they inherited from the previous administration. The Institute for Fiscal Studies has disputed this claim, saying that while many of the challenges Labour has outlined were “entirely predictable”, some of the financial pressures facing the new government “genuinely appear to be greater" than anticipated.
Labour has ruled out increasing 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.
Changes to inheritance tax and capital gains tax are rumoured to be being considered.
