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This briefing explains the system of local referendums on ‘excessive’ increases in council tax, that has been in place in England since the 2012/13 financial year. It explains the legal background to the system, including the procedures, timings and costs for referendums and how council tax increases are presented by local authorities.

Local authorities, fire authorities, and Police and Crime Commissioners are required to determine whether the amount of council tax they plan to raise is ‘excessive’. The Secretary of State sets thresholds of excessiveness, known as ‘referendum principles’, for different classes of authority. Since 2016-17, these thresholds have also included a ‘social care precept’, providing higher thresholds for authorities with social care responsibilities. The thresholds are finalised alongside the annual Local Government Finance Settlement each February.

Any authority proposing an excessive increase in council tax must hold a local referendum and obtain a ‘yes’ vote before implementing the increase. An authority proposing an excessive increase must also make substitute calculations, based on a non-excessive council tax level. This is implemented if the excessive increase is rejected in the referendum.

Draft proposals for 2023/24 will provide local authorities with social care responsibilities (county and unitary authorities) with a total threshold of 5% or more. Of this, 2% is available for adult social care and 3% for general spending. District councils have a threshold of 3% or £5 on a band D bill; and for Police and Crime Commissioners, the threshold is £15 on a band D bill. No thresholds are to be applied to parish and town councils or to mayoral combined authorities.

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