If you owe council tax, you are not alone. Council tax debts are now the most common type of debt that Citizens Advice sees. And in April 2018, the average council tax bill will be going up by £81.
Council tax arrears increase dramatically if you ignore them because local authorities are faster to go to court and send in bailiffs than other creditors and this adds a lot of extra costs.
This is also a priority debt because you can be sent to prison for not paying it. This is rare but it does happen.
So what should you do if you can’t afford it?
Are you paying too much council tax?
It’s worth a few minutes to check you are being billed for the right amount:
- Single people should get a 25% discount.
- you can also get the 25% discount also applies if the other adults in your house are exempt from council tax, for example they are students or have a severe mental disability such as Alzheimer’s, Parkinson’s, or mental problems after a stroke.
- If you are on benefits or a low income you may be entitled to Council Tax Support – apply on your council’s website.
- If you only get a few pounds of Pension Credit, you don’t have to pay any Council Tax. So if you are a pensioner with an income below £159 a week (£243 for a couple), check this Pension Credit calculator.
- You may be in the wrong council tax band. Check to see if your neighbours are in a lower band, and if they are, read MoneySavingExpert’s guide on how to challenge your banding.
- If someone disabled requires additional space or facilities, your council tax may be reduced.
If you have council tax arrears
If you get behind on the monthly payments, phone your council and try to make an arrangement to pay. The letter from the council may have said that you have to pay the whole of the rest of the current tax year immediately. Don’t let that put you off! Phone the council and offer monthly payments – it can help to get these accepted if you say you will set up a direct debit.
If you ignore the problem most local authorities are quick to go to court for a Liability Order which can add £100 or more to your debt straight away.
Councils are then quick to pass on Liability Orders to the bailiffs – every year more than a million council tax debts are sent to bailiffs for collection. Bailiffs fees then make your debt even larger as the following example shows:
council tax arrears £95
cost of summons & liability order £120
First letter from bailiff £75
First visit from bailiff £235
If you can’t afford as much as the council is asking, the best places to go for help are local services such as your local Citizens Advice or a Law Centre.
Liability orders and bailiffs
If you get a summons or a letter saying that a Liability Order has been granted, phone the council straight away – if you can get an arrangement to pay this stops the debt being sent to the bailiffs.
If you are on JSA ESA or Income Support, ask for your council tax debt to be repaid by deduction from your benefits of £3.70 a week.
When you make an arrangement to pay, try to pay the exact amount by the exact date agreed – a standing order or direct debit is the best way. If you pay a bit more, the council may treat this as a payment to some other council tax liability for a different year and your payment arrangement may fail.
If the debt is sent to the bailiffs, read Bailiffs – what you need to know. That looks at whether you have to let them in (for council tax arrears the answer is NO!) and what to do to stop your car being taken.
You may need help to negotiate with the bailiffs or to ask for the debt to be returned to your council – go to your local Citizens Advice or Law Centre.
(Do not google for help with bailiffs and end up talking to a firm that says they can get 80% of your debt written off – these are NOT bailiff specialists, they will not talk to the bailiffs or your local council to try to get things sorted out, they are unscrupulous firms that are trying to get you to sign up to an IVA, which is like bankruptcy, because they will make hundreds or thousands of pounds in fees if you do.)
Tip – check previous tax years
Councils work in tax years which run from April to March. If you get a letter saying that you owe £230 for the tax year 2014 and you may assume that is all you owe… but you may also have debts from previous tax years the letter doesn’t mention. This can be very confusing.
So whenever you talk to the council, don’t just ask about the letter you have just had – also check if you have any debts from previous tax years as well.
Don’t borrow more!
StepChange have found that people who get a tough demand or threat from their council are more than three times as likely to take out a payday loan. It might feel as though this will solve your problem, but by getting deeper into debt and at high-interest rates, this makes your situation worse. It’s better to get debt advice.
If you have other debts as well
If you don’t have enough money to pay all your debts, Council Tax should be one of your top priorities, even if this means paying less (or even nothing!) to your credit cards and loans.
Read about a Debt Management Plan and how it can help you deal with your non-priority debts if you can’t make the minimum payments. You may be worried about how your other creditors will react, but they will accept that you have to pay priority debts such council tax and mortgage or rent arrears first.
If you are looking at a Debt Relief Order (DRO) or bankruptcy – then council tax arrears for previous years and this year are included. But if you have a partner who is also named on the council tax bills, then they are ‘jointly liable’ with you, so the council will then chase them to pay.