What would happen if the single person discount on council tax was abolished?

In September 2024, there was a brief period of speculation that the government was considering abolishing the single person discount on council tax (25% for people living alone). This began when Angela Rayner, the Secretary of State for Housing, Communities and Local Government, did not directly rule the possibility out in debate in the House of Commons.

However, further reports, on 22 and 23 September 2024, then indicated that the government had ruled out scrapping the single person discount.

This Insight describes how the single person discount works and the potential effects of changing or removing it.

How does the single person discount work?

People living on their own receive a mandatory 25% council tax discount.

This discount is also available if only one person living in a property is liable for council tax. For instance, one liable person living with one student would be entitled to a single person discount. The single person discount is not available for empty or second properties.

The government could make an order, a type of statutory instrument, altering the percentage of the single person discount, or even reducing it to zero, using powers in section 11 of the Local Government Finance Act 1992.

Why does the single person discount exist?

Council tax was originally introduced to provide part of the funding for local government services. It was presented partly as a tax on property and partly as a tax on individual residents. When the legislation establishing council tax was introduced to Parliament in 1991, Michael Heseltine, the responsible minister, said:

The discount is set at 25 per cent because the basic bill is half the property and half the personal element. It assumes two people, so that where there is only one adult resident he or she gets a discount equivalent to half the personal element, or 25 per cent.

In line with this statement, empty properties originally received a 50% discount. However, since the 1990s, empty property discounts have been substantially curtailed, and premiums on empty and second homes have been introduced.

Would abolishing the discount bring councils more money?

No. As of November 2023, a single person discount was available on 32.9% of properties in England. People receiving a single person discount cumulatively saved approximately £2.5 billion in 2023/24. However, lowering or abolishing the single person discount would not automatically bring in this sum in extra tax for councils. This is because of the way that councils calculate their council tax.

Each council must set its annual budget and then add up all of its sources of income apart from council tax. The difference between its spending plans and its other sources of income is called the ‘council tax requirement’.

The council tax requirement is then divided by the ‘council tax base’. This is the number of properties liable for council tax. It is expressed in terms of Band D properties. Properties in other bands are expressed as a fraction based on the ‘band ratios’: for example, properties in Band A count as 6/9 of a Band D property as residents in them pay less council tax (see Appendix 3 of the Library briefing Council tax: FAQs). Dividing the council tax requirement by the council tax base provides the Band D council tax bill.

The council tax base takes account of single person discounts. That means that, if the single person discount was abolished, the council tax base would rise. In turn, this would make all Band D council tax bills fall, because more residents would be liable to pay the full amount of council tax.

Worked example: Anytown Borough Council

The table below shows how abolishing the single person discount would affect council tax in the fictional ‘Anytown Borough Council’. The table shows the effect of abolishing the single person discount on a standard (Band D) council tax bill. It assumes that the total number of properties remains the same.

The effect of removing the single person discount is that council tax bills will be reduced (except for the people previously receiving the discount). Because of the way the calculation is done, Anytown Council does not receive any more money by virtue of the discount being abolished.

To raise more money once the single person discount was abolished, the council would have to increase its council tax requirement. The UK Government would then have to decide how, or whether, to require a referendum to be held if the council tax requirement was increased by more than a set percentage, as it has done since 2012.

What perspectives exist on the single person discount?

No government has proposed ending the single person discount since it was introduced in 1993. It can be justified on the grounds that single people use fewer public services than households with multiple people. A petition on the parliamentary website seeking to increase the discount to 50% in 2023/24 attracted 12,677 signatures. On average, council tax provides around 50% of local government income.

Many recent proposals for council tax reform support abolishing the single person discount. The Fairer Share Campaign, which wants a ‘proportional property tax’ to be introduced, describes the single person discount as “distortionary” (PDF). The Institute for Fiscal Studies think tank describes the single person discount as “damaging to economic efficiency”, saying that “it encourages inefficient use of the housing stock, with single-adult households living in bigger properties, and multi-adult households living in smaller properties, than they otherwise would”.

The fraud prevention organisation CIFAS has said that a significant number of households make fraudulent claims for the single person discount. The Cabinet Office co-ordinates an annual data matching exercise to identify possible fraudulent claims for the single person discount. An answer to a parliamentary puestion in 2016 said that 37,000 fraudulent claims had been identified in the previous two years.

Further information

More information about council tax can be found in the Library research briefings Council tax: FAQs and Council tax: empty properties.

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About the author: Mark Sandford is a researcher at the House of Commons Library specialising in local government and devolution in England.

Image credit: Walter Baxter on geograph.org.uk. CC BY-SA 2.0.