Millions of people living alone in the UK are paying over £8,000 in extra annual costs, as a hidden ‘singles tax’ drives up everyday expenses.
Nearly one in three (29%) UK households are occupied by a single person, meaning around 8.6 million people are facing the financial strain of covering costs alone. At a time when people are already grappling with rising bills and persistent cost-of-living pressures, these added costs are placing even greater financial strain on those managing on a single income.
Unbiased, the UK’s leading financial advice platform, uncovers the key expenses single-person households face, and shares four expert tips to help tackle the ‘singles tax’.
Council tax
A breakdown of major outgoings shows council tax is one of the biggest expenses single-person households face. Although single occupants receive a 25% discount, it means they still pay three-quarters (75%) of the total bill, whereas couples can split it 50/50. Based on the average council tax in England, Scotland and Wales (£2,124), someone living alone can pay over £531 more per year.
Housing
Housing adds another significant layer to the financial squeeze on single people. ONS data shows the average UK monthly rent for a one-bedroom property stands at £1,121. Compared to splitting it between a couple, the single person will pay £6,726 a year more.
Analysis from Unbiased puts the average monthly mortgage payment at £1,592, based on the latest Rightmove data, further increasing the gap between single and multi-person households.
Energy charges
Additional costs continue to mount elsewhere. Even with less usage, single-person households have to cover the fixed energy standing charges themselves, which average £315 a year. This means single-person households would be paying over £157.50 a year more than a multiple-person household as they incur the full cost as opposed to splitting it, on top of the cost of the energy used.
Subscriptions
Research reveals that the average UK household spends £786 a year on subscriptions. From entertainment to food and drink, a single-person household will spend £393 more to enjoy them.
Tax
Married couples can benefit from the Marriage Allowance, which lets you transfer £1,260 of your personal allowance to your husband, wife, or civil partner. This reduces their tax by up to £252 in the tax year, a saving single people can’t access.
Beyond essential bills, single people face additional ‘hidden’ costs. Spending on socialising, groceries, and entertainment is shouldered individually, widening the financial gap between solo households and those able to split expenses.
“The data clearly shows that single-person households are at the sharp end of the cost-of-living crisis. This isn’t about lifestyle choice; it’s a structural penalty baked into our essential costs, from shouldering full housing expenses alone to limited council tax relief, and rising energy bills that don’t scale fairly for individuals. In many cases, single people are effectively paying a premium simply for living independently. Our goal is to help people take control of their future by offering expert advice and developing a professional financial plan, whatever their circumstances may be.”
Tim Grimsditch, Managing Director at Unbiased
Tim’s top four tips to help combat the ‘singles tax’
- Tackle everyday costs: With one income covering everything, it pays to review your spending holistically. Use a budgeting tool or spreadsheet to track where your money goes and identify hidden ‘single user’ premiums, from subscriptions where a family or bundle plan no longer makes sense, to grocery costs that creep up when you’re buying for one.
- Use every tax allowance available to you: Make sure your savings are working as hard as possible. You can currently shelter up to £20,000 a year in an ISA, where interest and investment growth are tax-free. Your personal savings allowance also lets basic-rate taxpayers earn up to £1,000 in interest tax-free (£500 for higher-rate taxpayers). Also, don’t overlook pension contributions; they attract tax relief at your marginal rate, making them one of the most efficient ways to build long-term wealth.
- Consider investing for the long term: Cash savings alone may struggle to keep pace with inflation. If you have money you won’t need in the immediate future, investing allows your money to grow over time. A financial adviser can help you find the right balance of risk for your circumstances.
- Protect yourself against the unexpected: When there’s no second income to fall back on, insurance matters more, not less. Income protection, critical illness cover, and an emergency fund of three to six months’ expenses can all act as a financial safety net. Spending a little now could save you from serious financial strain later.
For advice and tips on how develop a financial plan, please visit: https://www.unbiased.co.uk
