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Over-65s face council tax ‘lottery’

Some homeowners use property wealth to meet day-to-day costs

Retired households can pay 51% more for their annual council tax bill depending on where they live in the country, according to an analysis from independent equity release adviser Key.

The average council tax bill currently stands at £1,705 a year, or a fifth of the State Pension of £8,767.

For a single person – even after the 25% council tax discount – their bill of £1,279 would eat up 14.5% of the State Pension.

The highest average annual council tax bills based on a Band D council tax is charged in the North East at £1,884, while retired households in Scotland pay an average of £1,243, the study found.

There are additional council tax exemptions available which include exemptions for people with Alzheimer’s, Parkinson’s and dementia.
The total paid by over-65s households in council tax a year is approximately £11.447bn – around 28% of the total council tax paid this year.

For a couple on the average over-65 income, council tax accounts for 3% of their total income while a single person would spend around 4.6%.

The amount of council tax varies widely with Band H properties in Adur and Worthing Council paying around £3,818 a year (14% of average household income) and those in the London Borough of Westminster Band A properties paying just £502. Even in Band H council tax bills are £1,507 and £1,588 respectively.

Average council tax bills in England have increased this year by 4.7%, with the highest increase in England and Wales introduced by Pembrokeshire County Council at nearly 10%. The lowest is in Thurrock at 1.7%, while households in the former local authority of Christchurch – which has become Bournemouth, Christchurch and Poole – have had a 5.3% cut. Scottish councils have raised rates by between 3% and 4.79%.

Will Hale, chief executive at Key, said homeowners who are struggling to meet these and other bills are in a relatively fortunate position in that they do have a potential solution on hand.

Over-65s own more than £1trn in unmortgaged property, which could play a role in retirement planning. Out of Key’s clients, 11% use their property wealth to meet day-to-day costs.

“Good advice is key to making the right choice for your circumstances,” Hale said.