Council tax will surge past £2,000 for the average household under plans drawn up by Rishi Sunak.
The Prime Minister and Jeremy Hunt, the Chancellor, are preparing to allow town halls to put up the levy by five per cent without a local referendum.
The move would mean millions of households in Band D face paying up to £100 extra, which would take their annual bills above £2,000 for the first time.
Homeowners in the most expensive Band H could end up paying as much as £200 extra, with their bills exceeding £4,000.
Under present rules, councils responsible for social care are allowed to increase their bills by 2.99 per cent, including a one per cent levy for social care.
If they want to raise bills any further, they must hold a local referendum.
But under new plans expected to be unveiled in Thursday’s Autumn Statement, the maximum amount councils can increase bills without holding a referendum is expected to rise to 4.99 per cent, to help pay for social care.
Most councils are expected to take advantage of the freedom to charge residents more.
The Conservative Party manifesto in 2019 pledged to keep a veto on large council tax rises, insisting local people would “continue to have the final say”.
But a Treasury source said councils need “more flexibility” to raise money and pointed out that the increases would remain below inflation.
The plan to increase council tax was initially rejected over concerns that it would hit the poorest hardest when people are struggling to cope with the cost of living.
However, No 10 and No 11 agreed to allow councils to raise more money after deciding to raise benefits and pensions in line with inflation.
