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Council tax is one of the many household bills that are rising this month. Where you live and your property’s tax band will determine how much you pay. However, this year, few will escape the rise. 

As day-to-day life gets more expensive, Citizens Advice says one in three people are now “living on a financial knife edge,” with arrears on household bills up 25%.

Against this backdrop, this week at The Salary Calculator, we’ll walk you through: 

• How much will council tax increase?
• Why is council tax rising?
• Are you eligible for reductions or exemptions?
• Can you challenge your council tax band? 
• What happens if you don’t pay?
• Where can you find support for council tax debt?
• How to manage your money in the months ahead

How much will council tax increase?

Each year, councils are allowed to increase council tax by up to 4.99% without triggering a local referendum.

In 2025, 88% of authorities have decided to increase council tax by the maximum amount, and six have been granted permission to exceed this threshold by up to 10%: 

• Birmingham (7.49%), 
• Somerset (7.49%), 
• Trafford (7.49%), 
• Newham (8.99%), 
• Windsor and Maidenhead (8.99%)
• Bradford (9.99%).

A property’s council tax band determines the occupant’s tax bill, and in England, this is calculated based on how much the property would have sold for in 1991.

The more expensive a property is, the higher the council tax bill, with A being the lowest and H the highest. 

April is also bringing changes to how second properties are charged. From April, if a property is not a main residence, councils can charge a council tax premium of up to 100% unless it qualifies for exemption. 

Why is council tax rising?

According to a spokesperson for the Local Government Association (LGA), a body which represents councils in England, “severe funding shortages,” alongside “soaring cost and demand pressures on local services,” are the driving forces behind the hike. That said, the LGA noted that council tax increases alone won’t keep local services afloat. 

Indeed, in March, the County Councils Network (CCN), which represents England’s biggest councils, warned that without action in the next 12 months, rising SEND services costs could “trigger a wave of bankruptcies”. 

Already, a total of six councils have declared bankruptcy since 2021, including Birmingham City Council, which folded in 2023 following an equal pay dispute and a botched IT system. 

“7 million people in the UK are behind on at least one household bill”

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Accusations of mismanagement have also been levelled against some councils, with “speculative” investments behind others’ cash flow issues.

In a statement to parliament in February, Secretary of State Angela Rayner said: “We recognise the importance of limited increases in helping to prevent these councils falling further into financial distress – but we have been clear this must be balanced with the interests of taxpayers.”

However, research shows that many taxpayers are already struggling to make ends meet. 

“We know that currently, household budgets are incredibly stretched – our latest research found that 7 million people in the UK are behind on at least one household bill, including council tax,” said Grace Brownfield, Head of Influencing and Communications at the Money Advice Trust, the charity that runs National Debtline, adding that there is “little sign of respite for many across the country.”

Are you eligible for reductions or exemptions?

That said, if you are on a low income or claiming certain benefits, you could be entitled to a Council Tax Reduction.

Eligibility depends on a number of factors, including individual circumstances and where a person lives, as each council has its own scheme.  

Some individuals are also eligible for council tax exemption. You can read more about the exemption process and who qualifies here. 

Likewise, if you’re the only person in your home over the age of 18, you’re entitled to a 25% council tax discount. 

Can you challenge your council tax band? 

With the last valuation in England taking place in 1991 (2003 in Wales and 2005 in Northern Ireland), many properties are believed to be in the wrong tax band. 

You can challenge your band if you believe this is the case or if changes have been made to your property, its use, or the local area. 

That said, it’s important to note that your band can either go up or down. 

There are a number of checks that you should carry out before challenging your band. This includes checking your neighbours’ band and your home’s value with a valuation calculator. 

According to the government’s Valuation Office Agency (VOA), between April 2023 and March 2024, 27% of those who challenged their council tax band were successful in securing a reduction. 

What happens if you don’t pay?

Missing a council tax payment means that you’re in arrears, and amidst rising costs, more and more people are finding themselves in this situation. 

In June 2024, figures from the Ministry of Housing, Communities, and Local Government revealed that outstanding council tax arrears reached £6 billion. That’s a 9% year-on-year rise and a 71% increase since before the pandemic, according to debt charity StepChange. 

If you miss a payment, the council will send a reminder, giving you seven days to pay, but if this bill isn’t paid within the seven-day window, you’ll no longer be able to pay council tax in instalments. 

“If you are facing financial difficulty, the best time to seek support is now”

Councils only send two reminders in a year, so if you’re late on a third payment, you’ll be sent a final notice requesting payment for the whole tax year.

After this, if you don’t pay, you’ll be sent a summons, incurring an additional fee, and this may require you to appear before the Magistrates Court. 

Failure to pay or explain why you’re not liable following this could result in the council applying for a Liability Order — this grants a council legal power to recover your debt. If granted, this will add an additional charge to your bill, and the council will be able to take a number of different actions to recover the debt. 

This can include deductions from wages and benefits, passing the debt to Enforcement Agents (bailiffs), making an application for bankruptcy or liquidation, and applying for a charge on your home.

In July, a BBC investigation found that bailiff referrals have risen by nearly 20%. The process has been the subject of much criticism over the years due to both poor practices on the part of bailiffs and the mental health impact on individuals. 

The most extreme action taken against council tax non-payment is an application to the court for a prison sentence of up to three months. 

England is now the only part of the UK that has retained the imprisonment sanction for unpaid council tax.

Where can you find support for council tax debt?

Indeed, as a priority debt, council tax comes above other household bills and carries significant risks if you fall behind on payments, meaning it’s important to address arrears head-on. 

“If you are facing financial difficulty, the best time to seek support is now. You can contact your local authority if you are struggling and ask them to agree to a payment plan,” explained Emily Whitford, Senior Public Policy Advocate at StepChange. 

“An independent, free and impartial debt advice charity like StepChange can also assess your income and expenditure and assess where savings can be made to pay towards debts. In some cases, a debt solution may be necessary to address your financial difficulty,” she added.

Brownfield echoed this, noting that while worrying about debts and wondering how to tackle them can feel “overwhelming,” it doesn’t need to be. 

“There is a wealth of support out there to help,” said Brownfield, adding that speaking to a free debt advice service, like National Debtline, is a “great first step.”

“You can call, webchat or get advice online. Talking to our experts can help you understand the best option for you and alleviate debt-related stress,” added Brownfield. 

Brownfield noted that services like National Debtline — or Business Debtline if you are self-employed — provide free, expert, impartial advice to help people deal with their debts. 

Head over to StepChange and Citizens Advice for more information about accessing support. 

How to manage your money in the months ahead

While council tax exemptions, reductions and refunds will go some of the way to help with rising costs, there are additional steps you can take to manage your money in the months ahead. 

Getting a clear picture of your finances is a good starting point. According to Brownfield, this begins with opening all of your statements. 

“It can be extremely tempting to ignore the envelopes or emails but resist the urge to leave them alone. Take a deep breath, open all of your statements and get a handle on how much you owe. Make a list of all your debts, including the outstanding balances and repayment dates,” she said. 

Brownfield also highlighted the importance of speaking to your creditors, noting that they will have a range of options to help you, depending on your situation. “While it can seem daunting, talking to your creditors or utility providers, if you’re struggling to pay your bills, is a really important step.”

“The National Debtline has template letters and emails you can use to get in touch with your creditors and explain your situation,” added Brownfield. 

Budgeting and expense tracking are also tools that can help you identify your spending habits and pinpoint any areas where you can cut back. 

“Working out how much you have coming in every month and what you need to spend on essential costs is often the single biggest step you can take,” said Brownfield, adding that the National Debtline’s My Money Steps tool can help guide you through this process.   

Finally, check whether you’re eligible for extra support. Last year, a report from social policy software and analytics company Policy in Practice (PIP) found that £23 billion of support is unclaimed each year, meaning you could be entitled to claim benefits. Brownfield noted that you can check what you are entitled to using the Turn2Us online benefits calculator.

April’s hotly-debated Employer National Insurance (NI) rise is fast approaching. A big ticket item in the Autumn Budget, the increase has been met with unease by some, concerned it will tighten purse strings, cut jobs and raise prices. But while change is incoming, it’s not all doom and gloom. 

If you’re wondering what this means for you, The Salary Calculator is here to clear up the confusion. This week, we’ll be answering: 

• How is Employer NI changing?
• Why are Employer NI rates increasing?
• What do the changes mean for businesses?
• How will the changes affect you?

How is Employer NI changing?

Back in October, Chancellor Rachel Reeves announced that in the new financial year Employer National Insurance — a tax employers pay on top of employee wages — will be increasing from 13.8% to 15%. 

The Autumn Budget also delivered news that the threshold at which employers pay NICs on employees’ earnings will decrease from £9,100 a year to £5,000. 

However, alongside this, Employment Allowance — which allows employers to reduce their annual National Insurance liability — will increase from £5,000 to £10,500, and the £100,000 eligibility cap will be removed, meaning more employers will qualify. 

The changes to Employment Allowance, Reeves said, will help “protect” the smallest companies. 

“This means that 865,000 employers will not pay any national insurance at all next year, and over 1 million will pay the same or less than they did previously,” the Chancellor explained.

These changes will be effective from 6 April 2025.

It hasn’t all been plain sailing, though. Peers in the House of Lords (HoL) voted to exempt care providers, charities, and small businesses from the rise, resulting in ‘ping pong’ between the two chambers. That said, the HoL amendments are “likely to be overturned” in the House of Commons (HoC), according to the Chartered Institute of Taxation (CIOT).

Why are Employer NI rates increasing?

According to Reeves, the changes to Employer NI aim to raise revenues to fund public services and “restore economic stability.”

Indeed, the Budget committed to providing an additional £22.6bn for the Department of Health and Social Care (DHSC) across the next two years and a £3.1bn increase in the capital budget.

Reeves called this a “record injection of funding” and the “largest real-terms growth in day-to-day NHS spending outside of Covid since 2010.”

The Employer NI increase, expected to raise £25bn, is part of a larger £40bn in tax rises. However, according to 2023 projections from the Centre for Progressive Policy (CPP), far more is required to keep public services afloat. The CPP estimates that the government will need to find an additional £142bn per year by 2030 “just to maintain current levels of public services.”

What do the changes mean for businesses?

The incoming changes mean some companies are facing higher costs. When assessing the effects of the government’s new policy measures, the Office for Budget Responsibility (OBR) said the NIC rise will increase employer payroll costs by just under 2%.

But it’s important to note that the bill footed by employers will vary depending on how much workers earn.

According to the Institute for Fiscal Studies (IFS), for each median earner (£33,000), employers are facing an additional £900. Meanwhile, for a full-time minimum wage worker (£22,000), the increase will look more like £770. 

“SMEs, in particular, will bear the brunt of this additional tax burden”

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“Whilst smaller employers might not feel the impact due to the rise in the employment allowance, SMEs, in particular, will bear the brunt of this additional tax burden,” said Emily Gaffney, Freeths Taxation Senior Associate, in a statement to The Salary Calculator.

This is echoed in new findings from iwoca, revealing that 66% of SME leaders estimate the rise will “cost them each over £10,000.”

How will the changes affect you?

Although the NIC rise won’t directly affect take-home pay, some businesses will be looking to find ways to offset the increase, which, in some cases, could impact workers and consumers. 

Indeed, in October, the CIOT warned that the changes to Employers NI could have “unforeseen consequences,” including businesses seeking “alternative arrangements to taking on people as employees.”

“Alternatives could include outsourcing or offshoring services and reducing the numbers of employees,” said Eleanor Meredith, Chair of CIOT’s Employment Taxes Committee.

The Chartered Institute of Personnel and Development (CIPD) reported that this is a move that 32% of the 2,000 firms it recently surveyed plan to make, with companies reducing headcount through “redundancies or recruiting fewer workers.”

Likewise, the National Insurance Pulse Survey by Towers Watson, which spoke to over 200 respondents from various industries, found that 28% are looking to make workforce cuts, and 33% have reduced planned salary increases.

The IFS has claimed that “just £16bn” will be raised from the Employer NI increase due to this impact on wages.

Reflecting on the situation, Gemma Alicia Long, HR Consultant and Director of HR & Co, said that small businesses are having to make “difficult decisions” to mitigate the increase in NI costs and safeguard their businesses.

“For some, this may result in job losses,” said Long. 

These cascading impacts have led to some questioning whether the increase breaks the government’s pledge to “not increase taxes on working people.”

“The Labour party assured voters during the 2024 general election that there would be no tax increases on ‘working people’. From an economic perspective, there is a risk that an increase in employer national insurance, combined with the rise in the National Minimum Wage for young adults, becomes effectively that – a tax increase borne by working people,” said Gaffney. 

“Many companies plan to pass on the additional costs to consumers due to the increased operational costs”

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In hospitality, among the industries set to feel the biggest shock, trade bodies have warned that the changes will cost £1bn by bringing 774,000 into the eligible threshold. According to UKHospitality, in January, businesses were already making decisions to cut investment and jobs, freeze recruitment, and reduce hours.

Elsewhere, a survey of 52 leading retailers by the British Retail Consortium found that 56% plan to reduce ‘number of hours/overtime’ and 46% plan to cut back on ‘stores headcount’.

That said, according to the Trades Union Congress (TUC), employers are “more likely to absorb the increased contributions than shift the burden to their staff.”

Firms are also exploring price adjustments. “Many companies plan to pass on the additional costs to consumers due to the increased operational costs,” said Long. 

Indeed, data from the Office for National Statistics revealed that in late February, 49% of businesses with 10 plus employees shared their intentions to increase prices in response to future rises in employment costs. 

With the NIC changes right around the corner, Long notes that businesses will be looking to prioritise operational efficiency.

“Businesses are exploring cost-saving measures such as outsourcing and automation to maintain profitability without compromising service quality,” she said. 

Financial planning is also key. “Small businesses are revising their budgets and financial forecasts to accommodate the higher NI contributions, ensuring they maintain healthy cash flow and profitability,” said Long. 

However, as businesses seek to reduce costs with outsourcing, it’s key that employers are mindful of ‘false self-employment,’ something the CIOT has warned against. 

“We are concerned that the increase in employers’ NI could lead to an increase in ‘false self-employment’, where businesses trying to save money turn to arrangements where the worker is not directly employed by them, without necessarily appreciating the rules and risks of such arrangements,” said the CIOT’s Eleanor Meredith in October. Such arrangements can have consequences for both employers and employees. 

Another option for employers looking to minimise impact is salary sacrifice arrangements. A government-backed scheme, these arrangements reduce entitlement to cash pay in return for a non-cash benefit, which, in turn, can help save on NICs. Salary sacrifice arrangements come in many forms, including pension contributions, bike-to-work schemes and car schemes. For more insight into other avenues employers might explore to mitigate the NI rise, head here. 

Ultimately, with no rule book instructing employers on which option to choose, the impact of the rise will play out differently from business to business. But, for workers concerned about the consequences, the TUC advises that the National Living Wage and the Employment Rights Bill will provide “important protections.”

Chancellor Jeremy Hunt has given his Autumn Statement today, including a number of changes to National Insurance contributions for both employees and for the self-employed.

The standard rate of NI for employees (Class 1) will be reduced with effect from 6th January 2024 (i.e., before the start of the next tax year on 6th April), from its current 12% to a lower 10%. This rate of NI is paid by employees earning more than £12,570. The rate you pay on earnings over £50,270 will remain at 2%.  This change could save employees up to £754 per year.

The self-employed will also benefit from 6th April, with their (Class 4) NI rate being reduced from 9% to 8%, and Class 2 NI (£3.45 per week) being abolished.

If you’d like to see how much of a difference the NI change will make to your payslip from January, The Salary Calculator has been updated with the new NI rates, which are displayed in the results table in an extra “From January 2024” line. I hope that you find it helpful!

For many, it feels like ChatGPT came out of nowhere, only to completely shift day-to-day living. OpenAI launched its language model-based chatbot back on November 30, 2022, and in the short amount of time it’s been out, it’s had a BIG impact, and competitors have since come onto the scene with their respective offerings.

But, what does it all mean? AI experts are warning of danger ahead, and already, companies like IBM and BT have signalled that they will be making AI-related job cuts.

In all the hubbub, it can be difficult to know where you stand, so in this week’s article, we’ll explore the following:

• The potential scale of impact on jobs
• How people from the world of work are reacting
• How is the government dealing with the potential threat

The scale of the issue and impact

When listening to the experts, it seems as though the advancement of AI is unavoidable and inescapable, and it will undoubtedly have a presence in our lives. But how will it impact the world of work?

According to a report by investment bank Goldman Sachs early this year, AI could potentially replace a quarter of work tasks in the US and Europe – however, it will impact sectors differently.

While 46% of tasks in administration and 44% in legal professions could be replaced by automation, for construction, the figure stands at 6%.

It’s also worth noting that this displacement will also likely be experienced differently for men and women, with women dominating in clerical work. Indeed, research shows that more than twice the share of female employment could be affected.

High-income economies are also more likely to be affected, at a rate of 5.5 per cent, versus 0.4 per cent in low-income economies. That said, experts say that many places aren’t yet prepared for the disruption ahead. Some figures show that over 50 million Chinese workers will require retraining, while in the US, this figure stands at 11.5 million.

It’s also important to note that forecasts vary widely, too, and while there have been a number of potentially catastrophic forecasts, including from Cred CEO Kunal Shah, who recently warned that 90% of people could lose their jobs in the next ten years, the likes of Forrester predict that generative AI will “influence 4.5 times more jobs than it replaces.”

Responses from the world of work

But how do those in the workforce feel about AI? It’s really quite mixed.

According to some research, 36% feel that AI will make them feel more stressed, while 37% are concerned it will mean their work is less accurate. Meanwhile, 38% shared data privacy concerns.

Elsewhere, Censuswide, on behalf of Visier, found that those already using AI in the workplace saved around 1.55 hours a day – or 390 hours a year and 40 per cent think it will enhance their work-life balance.

Further to this, around 31 per cent believe it can help close the skills gap in the UK. This is huge, considering that 73% continue to report skills gaps, only 11% of UK workers have digital skills and 54% of organisations don’t have specific skills initiatives in place for specific talent pools. 67%, meanwhile, believe that developing AI skills will be important for their future career growth.

Speaking about this, Ben Harris, Director UK MD at Visier, said: “The workplace has been disrupted by rapid innovation and everyone has a role to play in its smooth adoption. With skills gaps widening across the UK, AI can alleviate a wide range of pain points. But, with opportunity comes responsibility.”

In order to survive and thrive in the new world of AI, some have suggested that workers learn how to code, become more data literate, and hone in skills that are AI-proof, such as communication, collaboration and adaptability skills. A central focus for people in this new world of work will also be becoming lifelong learners.

How is the government dealing with the potential threat?

Considering opinions are so divided, and the technology will reshape the world we live in so dramatically, you might be wondering what the government plans- on doing to regulate it and keep things in check. There’s also a lot of support for regulation, with almost 60% of British people wanting regulation to be introduced for AI in the workplace, according to Prospect Trade Union.

The government set out the need to legislate in an AI white paper earlier this year, but has been urged to speed things up due to how quickly AI is evolving.

Recently, the Science, Innovation and Technology Committee chair and Conservative MP Greg Clark said: “If there isn’t legislation passed in this session, then assuming the election is in late 2024, the earliest that new legislation can reach the statute book is mid to late 2025.”

Clark pointed out that, by then, two years will have passed, by which time, AI will have continued to be deployed and developed without the “statutory means to govern it.”

“And other jurisdictions such as the EU or the US will be proceeding themselves, and there is a danger that what has become embedded in Europe and in the US could become the default means of regulation, even if we had a better model in mind. That’s another reason for getting on with it.”

Elsewhere, the TUC recently launched an AI taskforce, bringing together leading specialists in law, technology, politics, HR and the voluntary sector for legal protections for both employers and workers. It reportedly aims to publish an expert-drafted AI and Employment Bill early in 2024 and will also lobby to have it incorporated into UK law.

The taskforce says that the UK is “way behind the curve” on the regulation of AI, and outlines that AI capabilities, left unchecked, could result in “greater discrimination, unfairness and exploitation at work across the economy.”

It appears there’s still a long way to go when it comes to implementing regulation around AI and while the UK plans to hold an AI Safety Summit in November, that’s still quite some way off.

There’s no denying we are living in challenging times right now. The cost of living crisis isn’t subsiding, financial insecurity is on the rise, the climate crisis is worsening. We’re also living in an era where technology is reshaping quite literally everything, including the world of work with AI and automation ramping up.

Universal Basic Income (UBI) is being proposed as a way of safeguarding against these disruptions, bolstering income security and reducing poverty.

In this week’s article, we’ll walk you through:

• What universal basic income is
• Where, why and how is it being trialled
• The pros and cons of the introduction of universal basic income.

What is universal basic income?

The idea of Universal Basic Income stretches as far back as 1516 in Sir Thomas More’s Utopia, and it’s essentially a guaranteed income for everyone in society. As of late, following the disruptions of the COVID-19 pandemic, the rise of automation and AI, it’s becoming a serious conversation.

It’s been tried in many places all over the world. In the US, for example, there are long-running UBI schemes, including in Alaska. It’s also seen in the Eastern Band of Cherokee Indians Casino Dividend in North Carolina. Elsewhere, Finland has trialled UBI schemes, as have Spain, the Netherlands, Kenya, India and more. Currently, in Wales, there is a basic income pilot for 18-year-olds leaving the care system. Over 500 participants are receiving £1,600 a month for two years after turning 18.

As noted, the pandemic really revitalised conversation around UBI, and back in 2020, over 170 MPs and peers actually called for a basic income. As we know, this didn’t go forward, and instead, the government introduced furlough.

At the time, the now Prime Minister and then Chancellor, Rishi Sunak, told the Commons: “We’re not in favour of a universal basic income, although we have strengthened the safety net for the most vulnerable in our society with over £7bn invested in improving our welfare system.”

Speaking about the increasing need to pivot toward UBI, Will Stronge, the director of research at the thinktank Autonomy, said: “Our society is going to require some form of basic income in the coming years, given the tumult of climate change, tech disruption and industrial transition that lies ahead. This is why building the evidence base and public engagement now is so important, so the ground is well prepared for national implementation.”

What’s going on with the trials?

The UK is currently running a micro pilot scheme to test this out. Led by Autonomy, the scheme will run in central Jarrow, in north-east England, and East Finchley, in north London. A total of 30 people will be randomly selected from a group of volunteers, with 20% of places allocated to people with disabilities. They will receive £1,600 every month for two years. This will cost £1.15m across the two-year period.

Alongside this group, there will also be a control group, which will not receive the basic income amount, and their experiences will be monitored alongside the other group.

The likes of Green MP Caroline Lucas welcomed the plans and said: “It’s so exciting to see these plans for England’s first ever basic income pilot scheme,” she said. “We are in such uncertain times – worsening job insecurity, spiralling cost of living and a welfare state creaking at the seams.

“We need big, bold ideas to provide security and dignity for all – tackling poverty, improving wellbeing and transforming society. The government can’t ignore this idea any longer,” she added.

The Green Party has long advocated for its introduction. Back in 2019, for example, it became the first political party to promise a fully costed Universal Basic Income for every resident by 2025.

Meanwhile, Cleo Goodman, a co-founder of the initiative Basic Income Conversation, commented: “We’re hopeful that this plan will result in the first ever basic income pilots in England. No one should ever be facing poverty, having to choose between heating and eating, in one of the wealthiest countries in the world. Basic income has the potential to simplify the welfare system and tackle poverty in Britain.”

According to estimates, if this kind of UBI programme was implemented on a national level, it would reportedly cost just under £1 trillion.

Weighing up the pros and cons

There’s no escaping the working landscape looks very different on the horizon, and indeed, Stronge notes: “With the decades ahead set to be full of economic shocks due to climate change and new forms of automation, basic income is going to be a crucial part of securing livelihoods in the future.”

Further, he added that “all the evidence” demonstrates that it would “directly alleviate poverty” and “boost millions of people’s wellbeing.” He says that, ultimately, the potential benefits are “just too large to ignore.”

But, it’s not without its critics, and, as we’ve outlined above, it would be expensive, as well as requiring a huge overhaul of both our tax and social security systems. But, with such big disruptions to work and living in store, large-scale changes seem almost inevitable.

There are also critics who argue that UBI would de-incentivise people from working and result in inequity. That being said, regarding the former point, a Finnish study on UBI found that there was actually a greater incentive to work, and also meant that people had more time to pursue business ideas.

With the trial running for two years, it will be some time until we have data to analyse, but it’s an idea that’s increasingly entering the mainstream.