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Major council tax change introduced and what it means for you

Councils will see an increase of over 23% in their core spending power compared to 2024-25 to pay for services including bin collections, housing, and children’s services

England’s councils will be handed a cash boost of almost £78 billion for essential services after a radical overhaul of council tax.

Councils will see an increase of over 23% in their core spending power compared to 2024-25 to pay for services including bin collections, housing, and children’s services. The changes will see the most deprived 10% of councils get a funding increase of 24% per head in a bid to make the country fairer.

Ministers say this will give councils more resources to bring back libraries, youth services, clean streets, and community hubs. Under the plans, council tax rises will be capped at 3% a year, with an extra 2% allowed for adult social care.

READ MORE: All the ways you will pay more tax in 2026 – and how to cut your billREAD MORE: Full breakdown confirmed after new Council Tax bands announced

Councils will be allowed to raise taxes above this limit, but only if their residents don’t already pay more than average. Six councils with historically very low bills will be allowed to raise council tax as much as they like to make up for more Government cash going to poorer areas. These are Wandsworth, Westminster, Hammersmith and Fulham, City of London, Kensington and Chelsea, and Windsor and Maidenhead.

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The money is part of the first multi-year funding settlement in over a decade, aimed at giving councils three years of financial certainty. Local Government Secretary Steve Reed said: “This is a chance to turn the page on a decade of cuts, and for local leaders to invest in getting back what has been lost – to bring back libraries, youth services, clean streets, and community hubs. Today we’re making sure every community has the funding they need to succeed.”

To help build a National Care Service, ministers have confirmed around £4.6 billion extra is made available for adult social care by 2028-29, including £500 million to improve care workers’ pay. The government is also rolling out the biggest transformation of children’s social care in a generation – backed by a historic £2.4 billion investment over the multi-year settlement.

Under the plans, councils will also be able keep all additional council tax from new homes to encourage local growth and home ownership. Minister of State for Local Government and Homelessness, Alison McGovern said: “Deprivation doesn’t happen by accident – it’s the result of years of broken systems and wrong priorities. This settlement tackles that head-on by directing funding where it’s needed most. By fixing the link between funding and deprivation, we’re giving local areas the tools to create opportunities, support families, and rebuild the services that hold communities together. This is how we deliver a fairer Britain where everyone has the chance to succeed.”