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Home»Broadcasting»BBC TV Licence Fee replacement could be linked to Council Tax

BBC TV Licence Fee replacement could be linked to Council Tax

9 March 2025

New BBC Chairman’s first major interview reveals preference for a replacement for TV Licence that could be collected via the Council Tax and vary depending on household.

  • Option to charge wealthier households more for the BBC appears to be back on the table.
  • BBC Levy could be collected with council tax.
  • Hybrid funding system dismissed.
  • Streamers could be asked to support UK TV industry through extra tax.

BBC Chairman Samir Shah revealed in a Sunday Times interview that he favours a new funding option for the public broadcaster that will see households pay different amounts for the BBC, depending on their circumstances.

In his first major interview since taking over from Richard Sharp, who left the BBC in 2023, Shah dismissed alternative options to replace the licence fee after 2027.

The Government is currently reviewing how the BBC is paid for, as record numbers of people stop paying and do without BBC services. It follows 15 years of cuts for the broadcaster, which has seen it lose shows and sporting events to rivals. It’s also cut back on services to UK audiences as it balances funding for international services. The current funding arrangement is linked to the BBC Royal Charter which expires in December 2027.

Shah dismissed alternative funding models including advertising and a Netflix-style subscription. Advertising on the BBC “would kill off ITV” he said. Meanwhile, a subscription “would not meet the BBC’s key role to offer something for everyone in the country”. He also dismissed a hybrid licence fee, which would see the BBC provide a basic service including news for free. Other content, including drama would be subject to a premium.

Funding through general taxation, suggested in January, would “leave the BBC open to influence from the government of the day”.


▶ TV Licence replacement options: as it stands…

  • The Government has two years to decide how the BBC will be funded after its current Royal Charter ends.
  • Multiple alternative options for the TV Licence fee are on the table.
  • In January, sources close to the Culture Secretary Lisa Nandy floated the idea of funding the BBC through general taxation. The idea was shot down within days.
  • Previously, there had been calls to make the BBC a hybrid service, with a basic free provision. Some BBC services would become subscription only.
  • If all other options lead to a dead end, the BBC Licence Fee could be retained. This is similar to how it’s ended up in the Republic of Ireland.

Shah told The Sunday Times any future funding of the BBC should be dependent on the household. He argued “Why should people who are poor pay the same as people in wealthy households?”

Council tax bands or income tax bands could be used to create a sliding scale, with homeowners in the highest bands paying more. If based on council tax bands, the new fee could be collected alongside the council tax as part of a new household levy. Households would be unlikely to have the option to opt-out of the BBC element of the combined bill.

Speaking in favour of such a levy, Shah said “It gets rid of the enforcement issue, which is a problem. The idea that not paying the licence fee is a criminal offence seems too harsh.” The stance is similar to that of ex-BBC Chairman Richard Sharp, who also favoured a sliding scale system based on a household’s ability to pay. An idea from 2023 is therefore back on the table in 2025.

However, it’s unlikely evasion would be gone altogether. Some households have tried to evade council tax.


▶ Explainer: What a household levy would mean

Adding the cost of the BBC to a council tax bill would see the total bill increase substantially. However, the overall extra cost to a household would be cancelled out by no longer having to pay a separate licence fee. The biggest losers would be households who have previously opted out of paying for a TV licence. People living in bigger, more expensive homes would also pay more. People in homes in a low council tax banding could end up paying less.

Opt-outs wouldn’t be possible, in the same way homes can’t opt-out of the extra police, fire and social care costs added to a council tax bill. There is no council tax in Northern Ireland, Isle of Man and the Channel Islands. Here, different mechanisms would be needed, perhaps based on rateable values of properties.

Alternatively, if income tax bands were used, this would be more difficult to calculate. If it was linked to one individual in a household, you’d expect households to nominally transfer the bill to the lowest paid person to avoid paying more.


Tax on streamers?


Meanwhile, both BBC Director General Tim Davie and Samir Shar have favourably spoken about a tax on streamers. That’s in addition to any replacement of the TV licence.

Any tax could support the wider British Film and TV industry, where multiple projects are reportedly stuck in limbo due to funding issues. Alternatively, in line with the system that funds Spain’s public broadcaster, any tax could directly support the BBC, which could then spend money on supporting new UK-made TV projects. In Spain, commercial TV and streaming services must pay a tax on revenues which supports public broadcaster RTVE.

In comments to The Sunday Times, Shah refused to be drawn on how much any potential tax on streamers should be.


By: Marc Thornham

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