Council tax bills are set to rocket by an eye-watering £100 from April as local authorities increase rates to the maximum amount, new analysis reveals.
The Office for Budget Responsibility (OBR) said councils will increase the levy by £1.8billion next month after the Government gave them the go-ahead to introduce hikes of up to 5%.
It's linked to last autumn's spending review, when Budget small print showed the Chancellor had given local councils the green light to increase the levy by the maximum amount if they wanted to.
Authorities can normally hike local taxes by no more than 2% without holding a referendum with local people.
However, the OBR now estimates around two-thirds of councils will raise taxes up to the new maximum of 4.99%.
That will mean increases of between £50 and £100 for band D properties, which paid an average of £568 in 1993 compared to £1,817 this year.
The OBR said the decision meant it had to more than double its estimate of the increase in council tax by £800million to an incredible £1.8billion for 2021-22.
"This is more than explained by the Government’s decision to allow councils to increase council tax rates by up to 5 per cent … rather than the 2 per cent our March 2020 forecast assumed," said the OBR in its Budget day report.
The hike pushes the total council tax take for 2021/22 to £39.9billion - which will rise to £45.6billion by 2025/26.
Sarah Coles, personal finance expert at Hargreaves Lansdown said the rise will put further pressure on already hard-hit households.
"Local authorities have been hit hard by the pandemic, and new demands on their services mean some have huge holes to plug in their Budgets.
"The stealthy rise of Council Tax has come in fits and starts, but over the years it has had a jaw-dropping effect. 31 years ago, when the Poll Tax was brought in, it was so high and so hated that it sparked riots. However, if the Poll Tax had stayed and risen with inflation, it would currently be lower than Band D Council Tax today.
"Your Council Tax could rise by £100 or more a year, but when it's broken down into a monthly cost, it can be easy to miss the change.
"Unfortunately it's not the only bill that will be creeping up, and £10 here and there will really add up. It's why it's worth making a list of these regular outgoings, and revisiting it once or twice a year.
"It gives you a clear idea of how your monthly costs are rising, so you have a chance to cut costs elsewhere and balance your budget – instead of getting to the end of every month and wondering how you’ve managed to run out of money yet again."
The Local Government Association said the increase will add further pressure on Covid-hit families.
A spokesperson said: "Councils face the tough choice about whether to increase bills to bring in desperately needed funding to protect our services at a time when we are acutely aware of the significant burden that this could place on some households.
Find out how much council tax is rising in your area using our exclusive calculator, here.
