I've received a letter saying my council tax is going up by £1,171 next year: Why is this happening and can I challenge it?

I have received a letter from Wandsworth council telling me that my council tax is going up by £1,171 next year because of cuts to the borough's government funding. 

This is a rise of 94 per cent and a massive hit to our monthly budget. 

A friend of mine in Westminster told me the council there says it might have to raise council tax by 200 per cent. 

Why is this happening? 

My wife and I are not rich by London standards and have a huge mortgage. We are expecting our first child and are deeply concerned by this rise.

Is there any way we can challenge it, and should we expect more to come?

We have also heard reports of a 'mansion tax' being extended to £1.5million homes, a threshold our home is on the border of.  

 Hikes ahead: Wandsworth Council is facing an £84 million annual funding cut by 2029, driven by central government changes

Ed Magnus of This is Money replies: This is happening across a number of London councils, with the news starting to sink in among residents.

Councils including Wandsworth, Westminster, Hammersmith and Fulham, Kensington and Chelsea, the City of London, Richmond Upon Thames are facing huge funding cuts by central Government.

It's all because of an overhaul of how central Government funding is distributed to councils. Labour has said it wants to make sure 'funding is truly based on need'.

The rises are the result of an assessment which looked at how much it costs to provide council services around Britain, as well as each local authority's capacity to raise the council tax it charges residents. 

The government is also changing how business rates revenue – funds from property taxes charges charged to businesses on their offices, shops and other premises – is redistributed between councils.

As a result, funding for some councils is increasing, but for others, like Wandsworth, it is being cut. 

Wandsworth is one of four London councils which have mounted a legal challenge against these changes. 

The council says it is facing funding cuts that'll reduce its funding by £84million a year by 2029, equivalent to a 40 per cent cut.

Wandsworth says this represents more than its entire combined annual budget for parks, libraries, leisure centres, bin collections and street cleaning. 

The council says it has already been through its own spending line by line and identified £79million in savings but these alone will not cover the withdrawn funding.

In its legal challenge it makes the case that Wandsworth residents and businesses pay £5billion a year in taxes to the Government and yet only get back £217million in funding. 

It points out that other councils – whether in London or elsewhere – pay far less in taxes and receive much more in funding. 

Its councillors argue that for every £1 its residents pay in taxes they will only receive about 4p back from the Government. Nationally across other councils, for every £1 residents pay in taxes they get 12p back from central Government in funding. 

In a letter last month, Conservative council leader Robert Morritt called out the unfairness of the new system. 

He argues that local authorities which have historically kept council tax low through 'sensible financial choices' are now being penalised through a 'deeply flawed' central government funding formula.

But where does all of this leave you, and your almost doubled council tax bill?

For further advice we spoke to Paula Higgins, chief executive of property advice website HomeOwners Alliance.

Paula Higgins, chief executive and founder of HomeOwners Alliance

What's your take on our reader's dilemma? 

Paula Higgins replies: Your concern is completely understandable. A £1,171 increase in a household bill is significant, particularly when you have a large mortgage and a baby on the way.

The proposed increase in Wandsworth is linked to the Government's new Fair Funding formula for local authorities, which changes how much councils receive from central government and takes greater account of their ability to raise money through council tax. 

This hits boroughs such as Wandsworth particularly hard because their council tax has historically been exceptionally low.

Is there anything they can do to appeal? 

Paula Higgins replies: The 94 per cent increase is not yet set in stone. It is Wandsworth's current proposal for 2027-28, with the final level to be agreed through its budget-setting process.

While there isn't an individual right of appeal simply because you consider the increase excessive, residents can have their say through Wandsworth Council's consultation. 

The council says responses will also help inform its challenge to the Government over the new funding settlement, so I would strongly recommend taking part.

The 200 per cent figure you have heard from Westminster also needs some context. 

Westminster has said council tax would need to rise by that amount if it tried to fill its funding gap through council tax alone. 

That does not mean bills are currently scheduled to triple.

A Wandsworth Council spokesman told This is Money: 'We completely understand why residents are concerned. 

'If the Government doesn't change its mind, the resulting financial pressure would mean council tax having to rise substantially to maintain essential services. 

We are using every route available to fight for a fairer deal and protect Wandsworth taxpayers.'

What about the mansion tax hitting £1.5million homes?

Ed Magnus of This is Money replies: To end on some slightly better news for you, The Chancellor John Healey is said to have dropped plans to hit £1.5million-plus homes with a mansion tax, so you can hopefully cast that worry aside for now.

The so-called mansion tax, formally known as the High Value Council Tax Surcharge, was first announced in Rachel Reeves' Budget in November 2025.

Under current plans, homes worth £2million or more will be subject to an additional annual tax bill of between £2,500 and £7,500 per year from 2028. 

Healey was said to be mulling plans to extend the entry threshold down to £1.5million, which would bring in 145,000 extra properties and more than double the amount of homes eligible to pay the tax. 

He ruled out lowering the mansion tax threshold to £1.5million in this week's Budget after the idea sparked alarm among some Labour MPs, with former Treasury minister Rachel Blake among those voicing concerns. 

Wandsworth council added: 'We are also strongly opposed to Government proposals to extend the so-called "mansion tax" to more Wandsworth homes.

Many of the properties potentially affected are family homes, not mansions, and we do not believe our residents should be asked to shoulder yet another disproportionate financial burden.'

Westminster council did not respond to a request for comment.  

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