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Council tax: local referendums

Published Wednesday, October 3, 2018

This briefing note explains the system of referendums on council tax increases in local authorities. It sets out the legislative framework and the thresholds that have been set in previous years.

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Since the 2012-13 financial year, local authorities, fire authorities, and Police and Crime Commissioners have been required to determine whether the amount of council tax they plan to raise is ‘excessive’.

A set of principles defined by the Secretary of State, and approved by the House of Commons, is used by authorities to decide if the amount to be raised is excessive. 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 takes effect if the excessive increase is rejected in the referendum.

Proposed thresholds have been published for the 2019-20 financial year. Authorities must raise less than the threshold to avoid a referendum.

In 2018-19, the thresholds were 3% or £5.00 on a band D bill for district councils; 3% for fire and rescue authorities and the GLA; and £12 on a band D bill for Police and Crime Commissioners. Local authorities with social care responsibilities (county and unitary authorities) faced a total threshold of 6%. Of this, 3% is available for adult social care and 3% for general spending. As in previous years, no principles were applied to parish and town councils.

Commons Briefing papers SN05682

Author: Mark Sandford

Topics: Local government, Taxation

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