THE number of BBC TV licences dropped by more than half a million in a single year, according to the corporation’s annual report.
Published on Tuesday, the BBC’s annual report showed that there were 23.3 million licences active by the end of the 2025/2026 financial year, a drop of 540,000 on the previous year.
Due to inflation and the fall in the number of licence fee payers, BBC income increased overall but declined in real terms.
The report shows that £313m was raised from TV licence fees in Scotland in 2025-26, up from £311m the previous year. Due to inflation, however, £311m at the end of the 2024-25 financial year would be worth closer to £320m today.
Across the UK as a whole, £3.88 billion was raised from licence fees, up from £3.84bn in 2024-25. Also due to inflation, £3.88bn at the end of the 2024-25 financial year would be worth closer to £3.96bn today.
Speaking to the press about the decline in licence fee payers after the release of the report, BBC chief financial officer Berangere Michel said: “We’ve done some estimates behind that, and we can see that the large majority of the reason for the decline is people … not consuming licensable content.
“That is a trend that I don’t see changing back. In fact, I see it accelerating, and that is one of the reasons why we would like a reform of the funding.”
The number of licence fee payers has fallen by more than 2.5 million since the start of the decade, when it stood at 25.9 million.
The annual report also says the BBC’s financial outlook “deteriorated” in the second half of 2025.
It adds: “A steeper in projection decline of licence fees sales combined with cost inflation and a challenging commercial trading environment has exacerbated the gap between income and costs.”
The report also highlights ongoing pressures on licence fee income, rising production costs and a rapidly changing media market.
BBC director-general Matt Brittin said: “This is a moment of real jeopardy, not just for the BBC but for public service broadcasting and the UK as a whole.
“I believe the case for the BBC has never been stronger: public service, economic impact, UK sovereignty and values.
“Our mission has never been more needed. So reinventing the BBC to fulfil that mission in a fast-changing world is our duty and our challenge. That’s the work that is now under way.”
The annual report outlines the challenges the organisation is facing and states the BBC will not be able to sustain its public service mission in the future, without reform of its funding model.
While 94% of adults across the UK use BBC services per month, fewer than 80% of households pay the licence fee.
Last month, the BBC announced plans for savings across the news, nations and content divisions, which is set to deliver £160m of £500m in savings needed by 2028/29.
BBC chair Samir Shah said the report “sets out in detail the considerable pressures now faced by the BBC – not least the question of future funding”.
He added that the current funding model also meant the BBC “cannot maintain its public service mission”.
“The new charter must ensure that the BBC can continue to be a universal public service media organisation of scale,” he said.
“We have to remember that the BBC is, and always has been, so much more than simply a broadcaster. It is a fundamental public good.
“It delivers unique benefits to audiences and to the whole of the UK – for our society, our economy, and our democracy.”
Previously, Brittin suggested that the BBC could be funded by a general levy added on to people’s energy bills.
However, Culture Secretary Lisa Nandy has said the UK Government has ruled out a universal tax or levy to fund the BBC.
In response to the figures, Public Accounts Committee chair Geoffrey Clifton-Brown said: “The BBC continues to face a steady decline in licence fee sales, with 587,000 fewer licences this year, offset by higher charges for those who do pay.
“It is still struggling to attract younger audiences, who increasingly favour subscription services and video-sharing platforms over traditional broadcast content.
“The committee has previously criticised the BBC’s licence fee enforcement and called for a clear evasion target, a recommendation the BBC declined to adopt. This issue remains acute, with an estimated £525m lost this year to evasion.
“Alongside this, the BBC has set ambitious savings targets: £700m by 2028 and a 10% reduction in licence fee-funded activity by 2029.
“Delivering these efficiencies will be critical to securing long-term financial sustainability as the current charter period draws to a close in December 2027.”
