Council tax lottery for over-65s

18 Jun 2019 Depending on where they live in the country, retired households can pay as much as 51% more for their annual council tax bill, new analysis* from UK’s leading independent equity release adviser Key shows.

Council Tax Eats Up a Fifth of State Pension Income:

The average council tax bill currently stands at £1,705 a year or a fifth of the State Pension of £8,767. For a single person – even after the 25% council tax discount – their bill of £1,279 would eat up 14.5% of the State Pension.  The highest average annual council tax bills based on a Band D council tax is charged in the North East at £1,884 while retired households in Scotland pay an average of £1,243, its study found. There are additional council tax exemptions available which include exemptions for people with Alzheimer’s, Parkinson’s and Dementia.

Over-65s face Council Tax Bill of £11.5 Billion:

The total paid by over-65s households in council tax a year is around £11.447 billion – around 28% of the total council tax paid this year. For a couple on the average over-65 income, council tax accounts for 3% of their total income while a single person would spend around 4.6%.

The amount of council tax varies widely with Band H properties in Adur and Worthing Council paying around £3,818 a year (14% of average household income) and those in the London Borough of Westminster Band A properties paying just £502.  Even in Band H council tax bills are £1,507 and £1,588 respectively.

Average council tax bills in England have increased this year by 4.7% with the highest increase in England and Wales introduced by Pembrokeshire County Council at nearly 10%. The lowest is in Thurrock at 1.7% while households in the former local authority of Christchurch – which has become Bournemouth, Christchurch and Poole – have had a 5.3% cut. Scottish councils have raised rates by between 3% and 4.79%.

Will Hale, CEO at Key said: “Council tax can be a major cost in retirement – especially for the many pensioners who we know are cash poor even if asset rich.  Just because you live in a nice area doesn’t mean that you can necessarily afford £1,705 out of your annual income with increases resulting in many needing to make cutbacks or prioritise it above other spending.

“While most people simply pay their council tax without complaint, it is easy to understand why they might be frustrated if their neighbour is paying substantially less just because they happen to be in a different post code.  The pressure is perhaps felt most acutely by those who are single and relying on the State Pension alone as then even after discounts around 14% of their income will go on paying for council tax.

“Homeowners who are struggling to meet these and other bills are actually in a relatively fortunate position in that they do have a potential solution on hand.  Over-65s own more than £1 trillion in unmortgaged property and we find that 11% of our customers are using this asset to meet day to day costs. 

“If your home is your largest asset it makes sense to assess what role property wealth can play in retirement planning. Good advice is key to making the right choice for your circumstances.”

The table below shows the picture around the country.

REGION NUMBER OF OVER-65 COUPLES AVERAGE COUPLES COUNCIL TAX BILL NUMBER OF OVER-65s SINGLES AVERAGE SINGLES COUNCIL TAX BILL
North East 172,186 £1,884 163,271 £1,413
South West 403,936 £1,846 383,064 £1,385
East Midlands 303,803 £1,836 288,105 £1,377
South East 580,138 £1,814 550,162 £1,361
North West 448,378 £1,807 425,211 £1,355
East Anglia 401,722 £1,780 380,965 £1,335
Yorkshire & Humberside 335,598 £1,746 318,257 £1,310
West Midlands 359,933 £1,732 341,335 £1,299
Wales 215,253 £1,591 204,131 £1,193
London 346,340 £1,476 328,444 £1,107
Scotland 338,786 £1,243 321,281 £932
GREAT BRITAIN 3,906,052 £1,705 3,704.226 £1,279
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