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Council tax is one of the payments that forms part of our monthly living costs. Whether you live in your own home, rent a flat, or have a room in a house share, it’s one expense that you can’t avoid. Unfortunately, that also means that it’s a payment that you could struggle to make if you start experiencing financial difficulties or have a sudden change in circumstances. If you do fall behind with your regular payments, you may end up in council tax arrears.
As soon as you start worrying about your ability to pay your council tax, try to continue making payments in the short-term and contact the council. Council tax is a priority debt, but your local authority may have options available to help such as implementing a reduced payment plan until you’re able to catch up.
If you find yourself in council tax debt, you may also wish to seek debt management help. Make sure to let the council know that you’re seeking help and consider applying for breathing space – a 60-day period that you can use to find debt solutions without facing any extra charges or legal action. An expert debt professional can take the time to understand your situation, talk you through the options available, and find the right debt management solution for you and your circumstances.
A priority debt, as its name suggest, should be prioritised over other types of debt such as credit cards or personal loans. Priority debts are important to address quickly as they can lead to you facing serious consequences if you’re unable to pay. Council tax qualifies as a priority debt as the local authority have a variety of powerful tools at their disposal to collect the money owed.
Council tax is an annual fee that’s paid to your local authority to cover the cost of everyday services in your community including police and fire services, bin collections, road repairs, libraries, parks, and education. The total amount is based on your home’s value and the number of adults that live there and will usually be split into 10 monthly payments. You can choose to pay over the phone, online, or via Direct Debit.
Unless you’re legally exempt, you’ll have to pay council tax whether you’re a homeowner or a renter. The payment could be the responsibility of only one person in your household or split between all the tenants, it all depends on who is named on the bill. However, if you’re not currently listed on the paperwork, it’s worth keeping in mind that the local authority can add new people to the bill later. You might also need to pay council tax if you own a property that’s currently empty.
Reductions in council tax are available for some people. Every local authority has different rules and eligibility criteria, but you can usually apply for a discounted rate if you have a low income, claim benefits, have a disability, or live alone. You might also qualify for a single person discount if the other residents in your home are full-time students, apprentices, or live with a disability.
You may also be able to request a one-off discount or change your payment schedule if you’re struggling to make payments, switching from 10 payments to 12 to reduce the amount owed each month.
There are many reasons why you might end up missing a council tax payment; maybe you’ve had to cover an unexpected bill that’s wiped out your savings, you’re struggling with the increased cost of living, or you’ve simply forgotten the date. If you do miss a payment, you’ll receive a reminder letter from the council requesting you pay the debt within seven days. Miss this deadline and you might be asked to pay the entire year’s bill in one go.
Miss another payment and a second reminder will be sent out, but you’ll only receive a maximum of two reminder notices in one financial year (running from 1st April to 31st March). After this, the situation can get more serious quite quickly. The council will usually send a final notice requesting the full amount owed, but they could also start legal action to recover the funds.
Once legal action gets underway, the council can ask a magistrate to issue a liability order, which is a legal demand for payment. If you’re unable or unwilling to pay, you might be able to appear in court and outline your reasons for being in debt. However, the amount owed could increase as the council’s legal costs can be added to your tax debt. If you’ve received a liability order, don’t panic; it’s best to speak to the council directly or pay a visit to your local Citizens Advice bureau.
The council also has the power to appoint bailiffs to visit your home and seize your property to cover the amount owed. In the worst-case scenario, you may even risk going to prison for up to three months if the court decides that you don’t have a good reason for being in council tax debt but haven’t paid your arrears.
One of the factors that differentiates council tax debt from other types of debt – and makes it a priority – is that the council has the right to ask your employer to pay your unpaid bill directly from your wages. The amount is taken from your net income – the money left over after you’ve paid your tax and national insurance – and could be up to 17% of your monthly paycheck.
Attachment of earnings won’t be an option if you’re self-employed, but it could apply if you’re receiving Employment and Support Allowance, Income Support, Jobseeker’s Allowance, Pension Credit, and Universal Credit. While this might be a good way for you to catch up on your council tax arrears, being in debt can sometimes be a disciplinary offence that could put your job at risk. Double-check your employment contract so you know exactly where you stand.
Yes, council tax debt can sometimes be written off. This is an option thanks to Section 13A(1) of the Local Government Finance Act 1992 and is usually available to those experiencing financial hardship, people suffering from severe physical or mental health conditions, or those who can’t live in their homes due to fire or flood damage. If you’re struggling to keep up with your everyday living expenses or can prove you’d have no money left over after paying your council tax debt, it may be written off. Each council has its own policy, but they must properly consider all written requests.
Different debt management solutions could also lead to your council tax debts being written off. In England and Wales, if you enter bankruptcy or a debt relief order, your debt will be cleared. If you opt for an IVA, you might be able to include your council tax debt in your proposal. It’s not guaranteed as your IVA application must be approved by your creditors, but this solution could allow you to pay back your debt with affordable repayments and have any outstanding debt written off when the IVA ends.
For people dealing with money issues, paying council tax can be very challenging, especially since it is a priority debt.
If you’re struggling with council tax debt, that’s where speaking to an experience debt solution provider such as My Debt Plan has its benefits. We have a team of friendly advisors who offer debt help every day to UK residents and can talk through your options and support you to find the right debt management solution for you.
For free advice about your finances and the debt solutions available that can help you pay off your council tax debts, call us on 0161 826 0585.
Tell us about your current debts and one of one of our experienced advisors will talk you through all the options available.
Dependant on your circumstances and financial situation, we’ll look at the solutions so you can choose an option that suits you.
Once you have chosen a solution, we will take the necessary steps to arrange this for you.
Lucy Novo Deakin is a licensed insolvency practitioner in the UK by the Insolvency Practitioners Association (IPA).
My Debt Plan Ltd provides insolvency solutions to individuals, specialising in IVA’s. All advice given is provided in reasonable contemplation of an insolvency appointment. Where you are not suitable for an IVA, we may refer you to one of our trusted partners who specialise on alternative solutions, and as such we will receive payment for the introduction if you enter into a debt solution with one of our partner companies.
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To find out more about managing your money and getting free advice, visit Money Helper, an independent service set up to help people manage their money.
*Our advice on your options is always free. We will always notify you if a solution you choose has any cost.
**Of 2,381 IVA cases approved between January-December 2023, the average expected write off assuming successful completion is 74%.
A debt write off amount between 25% and 75% is realistic, however, the debt write off amount will differ for each customer upon their individual financial circumstances and is subject to approval of their creditors. Any remaining qualifying unsecured debt in your IVA will be written off, however some unsecured debts will be excluded, such as court fines, child maintenance and student loans, therefore you will need to continue paying these both during and after the IVA.
