Your house price will determine how much TV licence fee costs under radical new plans to overhaul BBC funding
If the value of your home increases — you’ll be forced to pay more for your TV licence, that’s the radical new proposal from the BBC Chairman, Samir Shah.
Under the scheme, the one-size-fits-all annual £174.50 price tag would be scrapped in favour of a progressive payment structure, where wealthier households pay more. Your TV licence would be collected at the same time as Council Tax, with rates linked to property bands.
The BBC Chairman floated the idea of linking the TV licence fee to the value of homes in an exclusive interview with The Sunday Times earlier this year. It’s the first major intervention from telly veteran Samir Shah since taking over the post from Richard Sharp, who left the BBC two years earlier.
During the interview, the BBC Chairman dismisses several other proposals to replace the TV licence fee, including moving the BBC to a Netflix-style subscription, which Samir Shah says would “not meet the BBC’s key role to offer something for everyone in the country”. Meanwhile, advertising on the BBC “would kill off ITV”, he adds.
Samir Shah excludes the possibility of a hybrid model, which sees the BBC provide some basic services, like national news, for free, while other offerings, including drama and comedy series, are subject to a monthly subscription.
Finally, the BBC Chairman dismissed the idea of funding the BBC entirely from general taxation as this would “leave the BBC open to influence from the government of the day”.
That leaves the current BBC Chairman favouring the idea of tweaking the current TV licence model to address one of its biggest complaints — it’s a regressive tax. Culture Secretary Lisa Nandy has indicated she might be open to this suggestion, describing the current flat-rate model as “harder for poorer households to pay”.
Including TV licence fee payments within Council Tax payments will eliminate the need to prosecute those who watch live television without paying, the BBC Chairman believes. He told The Sunday Times: “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.”
Of course, evasion wouldn’t be completely eliminated, as some households already avoid council tax payments.
If implemented, a Council Tax-linked system would see households in higher bands paying more for BBC services, while those in lower Council Tax bands could end up paying less than the current flat rate.
The biggest losers would be households that have previously opted out of paying for a TV licence, as they’d no longer be able to do so. The approach mirrors proposals from former BBC chairman Richard Sharp, who also favoured a sliding scale based on ability to pay.
In Northern Ireland, the Isle of Man, and the Channel Islands, where there is no Council Tax, an alternative mechanism to charge TV viewers would need to be found.
Whatever the UK Government and the BBC come up with, the stakes are high. The BBC is facing a funding crisis, with licence fee revenues falling by £80 million as households cancel their subscriptions.
Half a million households cancelled their TV licence fee in 2023 alone, with British viewers increasingly turning their backs on terrestrial channels in favour of subscriptions like Netflix, Disney+, Prime Video, and Apple TV+, to name just a few.
With diminishing sports rights and dwindling viewing figures, plus the challenge of enforcing TV licence rules in the streaming era, the future of the BBC and its unique funding model hangs in the balance. A solution needs to be found before the current BBC Royal Charter is due to be renewed in 2027.
Over the next two years, the Government must assess a range of alternative funding models, which range from subscription services to household levies, as the BBC prepares for its biggest transformation in decades.
Samir Shah has suggested lengthening the Royal Charter period beyond the current ten-year cycle to provide greater stability for the broadcaster after this latest upheaval.
Rishi Sunak’s Government resolved to keep the licence fee in place — with an increase of £10.50, which raised the total to £169.50 following a two-year freeze — until the end of the current charter period in late 2027.
The last Conservative administration pledged to scrap the funding model altogether when the next renewal came around. Following the General Election last summer, the new Labour Government declined to take the same stance.
However, it’s also remained tight-lipped about exactly what it wants to do with the TV licence fee ahead of the next election, which isn’t due until 2029.
Culture Secretary Lisa Nandy has previously suggested a model where the BBC is “owned and directed by licence fee holders,” changing the relationship between the public broadcaster and its audience.
The annual £174.50 fee wouldn’t just pay for the upkeep of linear channels, live radio, and iPlayer, but would also make viewers stakeholders in the BBC. Under the proposal, licence fee payers would have a say in crucial BBC decisions — addressing the criticism that the annual fee is a one-way transaction, with limited accountability to those who fund it.
As it stands, all UK households who watch live television or use BBC iPlayer are required to pay the TV licence fee of £174.50 a year. This charge applies regardless of income or property value, with only those aged over 75 who receive Pension Credit eligible for a free TV licence.
Those caught watching live TV without a licence can face fines of up to £1,000, or £2,000 in Guernsey.
The licence fee was increased from £169.50 to £174.50 back in April, as part of the UK Government’s commitment to raise it in-line with inflation until 2027.
Previous Goverments opted to freeze the TV licence, which resulted in a 30% reduction in real-terms income to the BBC over the last decade, according to figured cited by BBC Chairman Samir Shah. This financial squeeze has forced the BBC to cut back on services and lose shows and sporting events to rivals.
Record numbers of people are now choosing to stop paying and do without BBC services altogether.
You don’t need a TV licence to watch on-demand content from streaming services like Netflix, Disney Plus or Amazon Prime Video. However, if you watch live content on these platforms, such as WWE streams on Netflix or Premier League fixtures on Prime Video — you must be covered by a TV licence.
The same applies when watching live content from any online TV provider, including ITVX, Channel 4, or Sky Go.
Catch-up viewing of non-BBC content on the likes of ITVX or Channel 4 doesn’t require a licence, but all BBC iPlayer usage does. DVDs and Blu-rays can be watched without a licence, with sales reportedly increasing as some viewers abandon expensive streaming services.
With so many viewers streaming live and on-demand content from the BBC, a new levy imposed on broadband has also been suggested as an alternative. This idea would simplify collection — it would be charged by Internet Service Providers (ISPs) like BT, Sky, and Vodafone as part of your monthly broadband connection fee — but could further increase rising broadband costs, potentially rendering internet access unaffordable for some households.
Any new funding model would be implemented from 2027 onwards, giving the BBC and Labour Government two years to finalise plans. Lisa Nandy has previously spoken about the need to hold a public consultation before any decision is made on the future of the TV licence fee.
“The BBC doesn’t belong to the Government or the BBC, it belongs to the people of this country,” she said. “They have to be central to the conversation about how we safeguard its future, not just for the next decade but well into the latter half of this century.”