What is council tax and how much is it going up in April?

Council tax bills will rise for millions of households on 1 April.

Council finances are "extremely challenging" and there could be further cuts to services, the Local Government Association has warned.

Council tax is a compulsory charge on properties in England, Scotland and Wales.

It is set by local authorities to raise money for providing services.

Typically, anyone who is over 18 and owns or rents a home has to pay council tax.

However, there are some exemptions and discounts.

Someone living alone, for example, is entitled to a 25% reduction, and properties occupied only by students are exempt.

Some discounts are available if you - or someone you live with - has a disability.

Northern Ireland uses a domestic rates system instead of council tax.

Most councils in England will put bills up by the maximum amount allowed, the County Councils Network said.

That's 4.99% (without triggering a referendum) for those with responsibility for social care.

All but three of London's local authorities are putting up bills by 4.99%.

Smaller councils without social care duties can increase bills by up to 2.99%.

For 2025-26, the government is letting six areas introduce bigger rises.

Bradford Council will increase bills by 10% and they will rise by 9% in Newham, and Windsor and Maidenhead.

Birmingham, Somerset and Trafford are putting bills up by 7.5%.

In April 2024, the average increase for a band D property in England was £106, which took the average bill to £2,171.

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Council tax rates in Scotland have been frozen or had limited increases since 2007, but will go up in April. Bills will rise by at least 10% in 13 areas.

The country's 32 councils have warned they faced a potential shortfall of £392m in 2025-26, which could rise to £780m the following year.

The Scottish government says it is giving councils an extra £1bn in 2025-26 to help limit increases.

Council tax rates in Wales are increasing by between 5% and 9.2% in April.

Wales' 22 local authorities were given £253m in December's draft budget, but council leaders said more was needed.

How much you pay depends on your property's council tax band. Broadly speaking, the more expensive the property, the higher the band.

In England and Scotland, bands are based on the price the property would have sold for in 1991. Wales uses 2003 prices and Northern Ireland 2005 prices.

You can check your home's band in:

• England and Wales
• Scotland
• Northern Ireland

Council tax bills also include additional charges.

One goes towards the cost of care homes and other adult social care services. Another is set by local police and fire authorities to help fund their work.

Some cities with mayors, such as London and Manchester, can also add a separate charges for other services.

Council tax funds local services, including:

• rubbish collection
• street lighting
• libraries
• police and fire services
• youth clubs
• parks and recreation facilities
• care services

In 2023-24, 61% of council spending went on children's services and adult social care, up from 52% in 2013-14.

About half of local authority funding comes from council tax, according to the Institute for Government (IFG).

Councils in England can also raise money by charging for services including parking, swimming pools and planning applications.

Most of the rest comes from a combination of business rates and central government grants.

Labour has promised £2bn of central government funding for English councils in the year from April 2025, an extra £700m on top of the £1.3bn announced in October's Budget.

But £515m of that has already been earmarked to pay for higher National Insurance (NI) contributions from April.

Councils have also had to deal with inflation, higher energy costs and increases to the National Living Wage.

The government is consulting on directing more money to deprived councils in England from 2026.

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Councils cannot technically go bankrupt, but if they cannot balance their budget for the financial year, they can issue what is called a section 114 notice.

This means they cannot commit to most new spending, and residents could see reduced services, such as fewer bin collections or cuts to libraries.

Before 2018, only two councils had issued a section 114. Twelve have been issued since.

Birmingham City Council went bust in 2023, with a £760m black hole. It followed Woking Council, Thurrock and Croydon (for the third time).

A number of local authorities in England have not issued section 114 notices but are receiving so-called "exceptional financial support" to help manage their budgets.

Middlesbrough Council is one of 19 authorities allowed to borrow money to fund day-to-day spending in 2024-25.

• Why do councils go bust and what happens when they do?