Up to four million households could be forced to pay the £180 annual TV licence fee under government plans to extend the charge to streaming services before Christmas.
Ministers are preparing a white paper ahead of the festive period to overhaul how the BBC is funded by bringing online platforms into the licence system.
The proposed expansion would capture viewers using Netflix, Amazon, Disney Plus, and YouTube, closing what officials view as a loophole used by internet users.
Current rules require anyone watching live television or using BBC iPlayer to buy a licence, while elderly viewers over 75 on pension credit receive it for free and visually impaired people get a 50 per cent discount.
Streaming platforms targeted under new paper
The upcoming changes are being dubbed a “YouTube tax” due to the site’s massive footprint in the UK, where it reaches 55 million users and holds a 79 per cent market share.
Under the blueprint, watching content via mobile phones, tablets, or computers would no longer allow households to avoid the annual £180 charge.
It’s not fair that people are essentially able to watch television content but avoid the licence fee.
Whitehall source
A Whitehall source confirmed that discussions had stalled under the previous administration, but the arrival of a new prime minister has enabled ministers to push forward with expanding the levy to streaming providers.
Falling licence numbers trigger cash crunch
The policy push follows a rapid decline in traditional broadcast subscriptions across the country.
Official figures show that around 539,000 fewer TV licences were active in the year to 31 March 2026, contributing to a drop of roughly two million over the last five years.
Despite raising between £3.8bn and £3.9bn annually from the licence fee, the broadcaster reported an operating deficit of £121m for 2025/26.
Cost cutting has already hit flagship output, including news programme Newsnight, which recently reduced its workforce by 10 per cent.
Tax funds directed towards political targets
Extra cash generated from taxing streaming services will not be used to cover the broadcaster’s budget shortfalls, according to government insiders.
Instead, ministers intend to redirect the new revenue into local news outlets and initiatives designed to suppress online misinformation.
A Whitehall source explained how the money would be allocated:
The money needs to be used to help support local journalism and counter a lot of the conspiracy theories and fake news which we have seen help parties like Reform getting elected in different parts of the country,
Broadcaster pushes to expand digital footprint
BBC director-general Matt Brittin has warned that the current payment structure is no longer fit for purpose, suggesting it could eventually be replaced by a universal household tax.
Speaking on BBC One’s Sunday With Laura Kuenssberg, Brittin outlined his vision for expanding the corporation’s reach onto digital platforms:
What we need to look at is the current model. You pay the licence fee if you watch live TV or you’re on iPlayer.
I’d like to see reform that allows us to be where audiences are. I think BBC content should be on Netflix, on YouTube, on TikTok, on Spotify, and Instagram, and everywhere where audiences are.
Particularly news, actually, which I think is part of disinfecting misinformation. It’s our job to be everywhere.
The corporation has already announced plans to launch its news channel directly on YouTube.
Charter renegotiation under way at Westminster
Culture Secretary Lisa Nandy’s Department for Culture, Media and Sport is leading negotiations over the BBC Royal Charter.
The agreement sets out governance and funding arrangements every 10 years, with the current charter due to expire in December 2027.
A BBC spokesperson supported updating the funding framework:
We have consistently argued that the current funding model is outdated and needs reform. We will continue to engage with government to secure a new charter that provides sustainable, sufficient and universal funding so the BBC can deliver for audiences for generations to come.
A spokesperson for the Department for Culture, Media and Sport insisted no final decisions had been made:
The BBC must be funded by a model that is sustainable and fair to all those that are paying it.
Through Charter Review, we are looking at a range of options, including how the licence fee could be reformed, but no final decisions have been made.