Millions face Council Tax rises of up to £600

Households face Council Tax hikes of up to £600 a year as some councils in England get set to pass on a 10% benefit funding cut.

A typical Council Tax bill will rise by £96 to £255 a year from 1st April, but could go up by as much as £577 a year.

That's according to research from think tank Resolution Foundation, and it's all down to Council Tax Support (CTS) replacing Council Tax Benefit (CTB) in April, with the responsibility of managing who qualifies shifting from the Government to local authorities.

Cutting the funding

The existing system of CTB is means-tested and helps 6 million low-income families with their council tax bills.

The new CTS system will have 10% less funding which is set to save the Government £500 million a year.

And the Resolution Foundation's study suggests almost three quarters of English councils will respond to these cuts by offering a less generous system of support.

2.5 million who are unemployed and pay no Council Tax on the CTB system will now have to start paying between £96 and £255 a year.

The hardest hit will be CTB recipients who are in work, including single parents who work part-time and those on minimum wage who depend on childcare. They will face a hike of up to £577 a year, depending on how far a local council chooses to pass on the cuts.

Pensioners will be fully protected from any hikes so people of working age already on CBT, around 3.2 million, will take the hit as councils struggle to manage the shortfall.

Households in Wales and Scotland won’t be affected as costs will be absorbed by councils and in some cases the Government.

Absorbing the impact

184 of the 326 local councils in England have submitted plans on how they plan to deal with the changes.

Of these 51 will absorb the costs of the new CTS system and residents won't see a change.

But 60 councils have plans for a moderate increase, 26 for a large increase and 39 have submitted plans for a severe increase in council tax bills for residents in need of assistance.

The Government will provide £100 million of support for the local authorities that limit the impact for those on benefits or low incomes.

The changes are part of the welfare reforms designed to tackle the budget deficit.

The news comes as other benefits are set to rise slower than inflation.

More on benefit changes:

Government childcare plans will INCREASE costs!

Child Benefit changes: what you need to know

Benefit reform: all you need to know about the Universal Credit