What will happen to the TV licence?

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The TV licence is a British institution, but for how much longer? For decades, paying the fee has been a non-negotiable part of watching television, directly funding everything from EastEnders to David Attenborough’s landmark documentaries.

Now, this funding model is facing its biggest-ever challenge. With the rise of streaming giants like Netflix and a profound shift in how we all watch TV, the government has confirmed that the licence fee in its current form is on borrowed time. We explore the potential replacements being discussed, what the changes could mean for your wallet, and what the rules are right now.

What will happen to the licence fee?

The TV licence in its current form is unlikely to survive beyond the end of 2027 when the current BBC charter ends. Changing viewing habits, the political mood, and financial pressures are all pushing towards reform.

Culture secretary Lisa Nandy called the licence fee "unenforceable" in an interview with the Telegraph, insisting "no options are off the table" in the coming formal review.

But some experts believe the model could continue, but with some changes. Professor Steven Barnett, professor of communications at Westminster School of Media and Communication, says: “The idea of a TV licence fee clearly feels anachronistic in a predominantly online world. But the principle of some kind of individual licence/levy to pay for the BBC is important to maintain the direct link between citizens and an institution that operates in the public interest.

“It doesn’t belong to the state (i.e. the government) or to the market (i.e. shareholders or private owners) but to the British public, and that direct financial relationship is an important part of the informal contract. I think that the model is sustainable, but will need some adaptation to move it away from a TV-based levy and also to introduce a level of progressive taxation,” he says.

What might replace the licence fee?

There are several options currently under discussion, including:

A broadband levy – a small, universal fee added to all broadband bills.
A paid subscription, similar to Netflix or Disney+ – either as a standalone subscription via BBC iPlayer, or bundled with other Smart TV services.
Advertising – allowing the BBC to show adverts on some platforms or services.
General taxation – funding from central tax revenue, from the same pool as the NHS, schools and defence.
A hybrid model – where core public service content is free (news, radio, education) and there’s a subscription for premium drama, sport, and international sales.

In her upcoming book ‘The BBC: After the Licence Fee?, media journalist Maggie Brown says: “The BBC has earned a unique and special place in the lives of UK citizens over a century because it attempts to cater for everyone, from toddlers to the elderly. I think that trust continues despite the major changes taking place.

“Whatever happens between now and the crucial 2027 date, the issue of funding the BBC should at the very least, result in the creation of an independent panel to set licence fee levels, whose interests are separate from the government of the day, and put viewers before politics.”

Changing viewing habits

With an ever-expanding choice of viewing options – Netflix, Disney+, YouTube and dozens of streaming services — the traditional role of the BBC has become less important for many viewers.

The latest Ofcom report shows that YouTube is now the second most-watched TV service in the UK, behind the BBC. Although 75-85% of those aged between 55 and 74 still regularly watch traditional broadcast TV, fewer than half of 16-24-year-olds now tune in to broadcast TV each week – highlighting a sharp generational divide.

The number of people watching catch-up TV – which doesn’t need a licence unless it’s on BBC iPlayer – has been steadily increasing, with people less likely to watch at the time it’s broadcast. There are age differences here too. Live TV still makes up over three-quarters (76%) of over-74s’ viewing, and more than three-fifths (63%) of 65-74s’.

Ed Leighton, Ofcom’s interim group director for strategy and research, says viewing habits are shifting fast: “Scheduled TV is increasingly alien to younger viewers, with YouTube the first port of call for many when they pick up the TV remote. But we’re also seeing signs that older adults are turning to the platform as part of their daily media diet too.”

Changing attitudes towards the licence fee

The result of these changing viewing habits is that increasing numbers are choosing not to shell out £174.50 for their licence fee each year.

A YouGov poll this March found 66% of respondents felt the licence fee didn’t offer good value.

The number of people paying for a TV licence has been going down. Around 300,000 fewer households paid in 2024/25 compared to the previous year. That means a loss of around £50m in revenue. That’s largely because of a rise in “no licence needed” declarations.

But the evasion rate – the number of households that should be paying but are unlicensed – has also been climbing steadily for the last 10 years. It’s estimated that 12.5% of UK households that need a licence don’t have one, based on 2024/25 figures. That’s up from 5% in 2014/15.

Professor Barnett says: “The BBC has seen a 30% drop in its real-terms revenue over the last 15 years. There is a noticeable decrease in local journalism, the news channel now has significantly less domestic coverage, and there is less investment in big-ticket drama series. Any further reduction in revenue in real terms will start to hit other favourite programme areas such as major documentaries (like the Attenborough series) and radio.”

Meanwhile, speaking on Radio 4’s Today programme, Jordan Schwarzenburger, manager of Europe's biggest YouTube group, The Sidemen, said: “In this era of competition and total decentralised media [meaning content comes from many different creators, not just big broadcasters], it feels like a forced subscription on young people. If you surveyed Gen Z and Gen Alpha, would they even know what PSB [public service broadcasting] is?”

Senior Couple Sitting On Sofa At Home Watching TV Together — Image credit: Shutterstock/ Perfect Wave

Who needs a TV licence?

While the debate rages on, here’s what the rules currently say about who needs to have a TV licence.

You’ll need a licence if:

You watch or record live TV on any channel — e.g. BBC, ITV, Channel 4, Dave, Sky, Virgin Media, and international channels.
You watch live TV on streaming services, e.g. YouTube livestream, Amazon Prime live sports, NOW TV live channels.
You use BBC iPlayer – live or on-demand.

If you own a second home, you’ll usually need a separate licence.

You'll need a licence for your static caravan or mobile home, either if it's your main home, or if anyone in your main address is going to be watching TV whilst someone else is watching it in the caravan or mobile home. If neither of those apply, you need to fill in a non-simultaneous use declaration and send it to TV Licensing.

Renters should check their tenancy agreement, but will typically need to buy one.

You can visit the TV Licensing website to find out more.

Discounts and special circumstances

Some viewers may qualify for a free or reduced-price licence:

If you’re over-75 and on Pension Credit, you can apply for a free TV licence.
People who are blind or severely sight-impaired are eligible to apply for a 50% concession.
Care home, supported housing or sheltered accommodation residents, may be covered by an Accommodation for Residential Care (ARC) licence. Ask your manager if you’re not sure.
The Simple Payment Plan offers flexible instalments if you can’t afford to pay for your licence in one go or prefer to spread the cost.

There are ongoing campaigns for free TV licences for all pensioners, but the government says it has no plans to expand existing concessions.

How to legally avoid paying for a TV licence

You can avoid paying if you:

Only watch on-demand or catch-up (except on BBC iPlayer), such as Netflix, Amazon Prime Video, Disney+, Channel 4 on demand and ITVX.
You only watch YouTube videos that are not live.
Only watch DVDs, Blu-rays, or downloaded files.

But you must tell TV Licensing that you don’t need a licence by filling out the declaration at TV Licensing. Read more about how to get a free TV licence.

What if you don’t pay but still watch?

Watching live TV or BBC iPlayer without a licence could land you with a fine of up to £1,000 and possible prosecution.

According to the Ministry of Justice, there were 28,542 prosecutions for TV licence evasion between June 2020 and June 2024. TV Licensing says it writes to all addresses where there is no TV Licence or a current declaration to say that one isn’t needed. So if you don’t need a TV licence, it’s important to let TV Licensing know by making a declaration.