A council is seeking a record 25% tax rise in what has been branded a “true nightmare before Christmas”.

The Royal Borough of Windsor and Maidenhead, which is controlled by the Lib Dems, is pushing for the bumper council tax hike in a bid to avoid bankruptcy.

The move has sparked fears other local authorities could ask for eye-watering increases if the Labour Government gives the green light to the request.

John O’Connell, chief executive of the TaxPayers’ Alliance pressure group, said: “Taxpayers will be gobsmacked by this unprecedented tax increase that would leave household finances in ruin.

“Ministers must reassure taxpayers, and send a message to any other councils that have similar ideas, that increases like this will not be tolerated and they should dismiss this request without delay.

“In a true nightmare before Christmas, local residents are now staring down the barrel of a devastating council tax rise.”

The local authority has been on the verge of issuing a Section 114 notice – which effectively declares a council bankrupt – for more than a year.

Sally Coneron, an opposition Tory councillor, warned that the jump was “not realistic”.

She said: “According to the current administration, there has just been a continuous too low council tax that has caused all these problems. But this is terrible for our residents.

“Twenty-five percent is just not realistic for people to manage. Keeping tax low and allowing our residents to keep their money is vital.

“It seems to me that council tax is the easiest way to get money in but has the most detriment on the residents.”

If the increase is approved, council tax would increase by £320 a year for an average Band D property. However, that would still leave the charge in Windsor and Maidenhead lower than in other Berkshire boroughs.

The King would also pay £836 more a year, assuming Windsor Castle is in the highest council tax band.

Lib Dem council leader Simon Werner blamed the previous Conservative administration.

He said: “While difficult decisions have already been made over the last 18 months, it’s clear that we will need to continue to make tough calls – to fix the mess we inherited and prepare a budget for 2025 to 2026 that balances.”