The BBC's latest annual report shows TV licence holders have fallen to their lowest level since 1999

The BBC has suffered another major blow as hundreds of thousands more households stopped paying the TV licence fee over the past year.

The latest figures show the broadcaster has recorded its biggest annual drop in licence fee payers since the Covid pandemic.

The BBC's annual report, published on Tuesday, revealed that 23.3 million households held a valid TV licence at the end of the 2025/26 financial year, the lowest total since 1999.

The number of licence holders fell by almost 540,000 over the year, marking the steepest annual decline since the pandemic, when 738,000 households stopped paying the fee.

Since the start of the decade, the number of households paying the licence fee has dropped by more than 2.5 million, falling from 25.9 million.

At the same time, the number of households declaring they do not need a TV licence increased by 62,000 to 3.7 million.

The decline comes after a turbulent year for the broadcaster, which has been hit by a series of high-profile controversies.

In October, The Telegraph reported that a Panorama programme edited footage of a Donald Trump speech in a way that created the impression he had encouraged supporters to storm the US Capitol in 2021.

The BBC is now facing a $10billion lawsuit from Mr Trump over the programme.

Separately, an internal review found that the documentary Gaza: How To Survive A Warzone breached the BBC's editorial standards on accuracy after failing to disclose that its child narrator's father held a role in the Hamas-run government.

These controversies prompted the departures of two of the BBC's most senior figures: Tim Davie stepped down as director-general, while Deborah Turness resigned from her position as chief executive of BBC News.

The annual report acknowledged that "a series of high-profile incidents have adversely impacted public perceptions of the BBC's impartiality."

The corporation's financial position has worsened considerably, with the annual report stating that the outlook "deteriorated" during the second half of 2025.

Licence fee revenue, currently set at £180 per household, "remains insufficient to sustain a universal public service," according to the report.

Over the past decade, income from the fee has fallen by more than £1 million — a 26 per cent reduction from £5.21 million in 2016/2017 to £3.87 million in the most recent financial year.

BBC chief financial officer Berangere Michel attributed the decline primarily to viewers abandoning licensable content altogether.

"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," she told journalists.

The report highlighted mounting pressures from rising production costs and an increasingly difficult commercial environment.

New director-general Matt Brittin described the situation as "a moment of real jeopardy, not just for the BBC but for public service broadcasting and the UK as a whole."

In his foreword to the report, he wrote: "It is vital that the BBC puts its hands up and apologises when it makes mistakes and is always fully accountable, transparent in its response and open to rigorous scrutiny."

Public trust in the broadcaster's impartiality has declined, while weekly usage of BBC News fell from 74 per cent to 72 per cent of adults.

Chairman Samir Shah stated that the current funding model meant the corporation "cannot maintain its public service mission."

He called for the new charter to guarantee the BBC's future as "a universal public service media organisation of scale."

Despite 94 per cent of adults accessing BBC services monthly, fewer than 80 per cent of households contribute through the licence fee.