Council tax – built in inequalities

Much is made of inequalities in the Council tax system.  Invariably it seems commentators, lobbyists and politicians focus on the fact that people with more valuable properties pay less than those in less valuable properties.  Ostensibly this appears unfair yet this approach fails to recognise that what is actually important is what share of income is taken by council tax. 

 

Methodology

This analysis attempts to address that issue. To do so council tax for Band D properties was used together with Gross median total annual pay.  It was assumed that a household with 2 people would have two earners. Council tax for households was then expressed as a % of income. Due to a lack of data it is not possible using this approach to include other sources of income so that earnings from property, interest or shares are excluded as are self-employed earnings. Neither are those with pensions included in the analysis.  Therefore this picture is partial.

 

Results

The local authorities are ranked in terms of earnings.  What is clear is that the share of earnings in those areas with higher earnings is lower than in areas with lower earnings.  In Kensington & Chelsea for a 2 person household the tax equates to 1.7% of earnings, and for a 1 person household 2.5%.  In contrast in Gwynedd, the figures are 4% and 6%.  In Cornwall, the disparity is even worse at 4.6% and 6.9%. 

 

	Median annual pay - gross	Council tax		Households (people)
	Total	Band D	0.75	2	1
Area	£	£	£	%	%
Kensington & Chelsea	46690	1569	1177	1.7	2.5
Westminster	45172	1050	788	1.2	1.7
East Hertfordshire	44154	2492	1869	2.8	4.2
Surrey	39473	1846	1385	2.3	3.5
Milton Keynes	36061	2800	2100	3.9	5.8
England	33080	2047	1535	3.1	4.6
Bath & NE Somerset	32481	1950	1463	3.0	4.5
Leeds	31679	2172	1629	3.4	5.1
Portsmouth	30962	2292	1719	3.7	5.6
Canterbury	30188	2419	1814	4.0	6.0
Somerset	29908	2561	1921	4.3	6.4
Durham	29718	2622	1967	4.4	6.6
Cornwall	28210	2590	1943	4.6	6.9
Blackpool	27979	2513	1885	4.5	6.7
Nottingham	26512	2755	2066	5.2	7.8
England	33080	2047	1535	3.1	4.6

 

Conclusion

Basing charges for local services on house values is clearly unfair.  Households in areas with lower incomes pay more council tax as a share of income than those on higher incomes, while single person households pay even more. It also underestimates the likely low share of income of those with sources other than employment earnings.

 

 

Sources

Office for National Statistics (ONS), released 23 October 2025, ONS website, statistical bulletin, Employee earnings in the UK: 2025.

 

Local Authority Council tax data (various).