How much is your council tax bill set to rise? Londoners face inflation-busting increases

Millions of Londoners will see inflation-busting increases to their council tax bills next year as town halls struggle to cope with the skyrocketing cost of providing services.

Homes in just one borough - Tower Hamlets - could remain slightly below the threshold, analysis by the Standard reveals.

In 2026, London households saw an average £87 hike in their bill.

But that increase is expected to be significantly larger in 2027. In some cases it could be well over £1,000, as payments rise from between 5% to a staggering 150%.

Local Government Secretary Angela Rayner

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London council tax bills are split into two payments, with one going directly to the local authority and the other to City Hall to cover the cost of the Metropolitan Police and London Fire Brigade.

Lord Sadiq Khan will reveal early next year how much he will increase the mayor’s precept, which is currently set at £510.51.

Fair Funding Review

Labour’s Fair Funding Review means four London boroughs, along with the City of London, face having to impose huge council tax hikes.

Hammersmith and Fulham, Wandsworth, Westminster and Kensington and Chelsea were given permission to increase bills way beyond the usual 5% cap after their Government funding was slashed.

Ministers argued that the town halls have had “historically very low” council tax levels and should bring bills more in line with national averages.

In 2026, London households saw an average £87 hike in their council tax bill

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It will take the Tory minority-run borough from having the lowest council tax in the country to around average levels.

Westminster and Kensington and Chelsea have suggested similar increases. The three boroughs have come together to explore a legal challenge to the Government’s funding cuts.

Labour-run Hammersmith and Fulham has said bills would need to rise by 150% to make up shortfalls.

The councils are expected to confirm the exact increases by the end of the year.

Government Discussions

Several other London boroughs are understood to be seeking permission to exceed the 5% cap on council tax increases as they struggle to balance budgets.

Surging demand for social care and temporary accommodation alongside the ballooning cost of providing services is pushing many councils to the brink of bankruptcy.

Town halls usually have to hold a referendum if they want to impose rises above the limit.

But floundering local authorities can ask ministers in the Ministry of Housing, Communities and Local Government, led by Angela Rayner, to approve larger hikes if they can prove there is no other way of balancing their books.

At least three London local authorities are in discussions with ministers this year.

Barnet council is in talks to exceed the 5% limit in a bid to plug a £200 million budget blackhole.

To balance the books, the local authority would need to increase bills by 32%, or around £500 for an average Band D property.

Bromley will see £30.5 million stripped from its funding in real terms by 2028/29 and is facing by “far the biggest financial challenge” it has ever seen.

Green-led Lambeth is understood to have also had held meetings with Government.

Southwark has warned residents that “tough” decisions” will need to be made, with cuts to services and rising bills expected.

It is not yet known whether these boroughs will receive permission to increase council tax above 5% or what rise ministers will agree to.

Bills over £2,000

Local authorities in the capital are facing a collective funding shortfall of £5.2 billion by 2030, according to London Councils.

It means every remaining town hall in the city is expected to put up council tax by at least 5% in April 2027 as they struggle with the cost of providing services.

The move would mean that, including a City Hall precept of at least £510, residents in average Band D homes in every borough bar one would be paying annual council tax bills of over £2,000 for the first time.

Just Tower Hamlets may come in slightly below the threshold.