If you owe council tax, you are not alone. In 2018:
- 2.2 million people had council tax arrears;
- council tax debts were the most common type of problem debt that Citizens Advice saw.
And in April 2019, the average council tax bill increase was 4.5% – well ahead of most people’s pay rises – so this year is likely to be even more difficult for many people.
It’s a “priority debt”
Council tax arrears increase dramatically if you ignore them because local authorities are faster to go to court and send in bailiffs than commercial creditors such as payday lenders, credit cards and mobile phones. This adds a lot of extra costs.
This is also a priority debt because you can be sent to prison for not paying it if you live in England. This is very rare but it does happen.
So what should you do if you can’t afford it?
Council tax – the discounts you could get
Take 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, eg 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. It used to be the case that an application for Housing benefit automatically made an application for Council Tax Support, but now with Universal Credit, you have to apply separately to your local council for Council Tax Support.
Pensioners who get 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.
Is the council tax band right? 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. The Valuation Office Agency’s statistics show nearly 30% of band challenges in England and Wales in 2019-20 resulted in a decrease in the band.
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 very quickly, 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.
Priority debts have to be paid first!
When I said council tax arrears are a priority, you may just have thought I meant they were important…
But they literally have to be paid first.
If you don’t have enough money to pay your Council Tax and all your other debts, make an arrangement to pay the council tax and what is left has to be divided between your credit cards, catalogues and loans.
Read about a Debt Management Plan and how it can help you deal with your credit cards, catalogues and loans. If necessary, you can make token payments of £1 a month to your other debts.
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 first.
If this seems impossible, talk to a debt adviser. There may be options such as a Debt Relief Order (DRO) or bankruptcy that would give you a clean start. They would wipe council tax arrears for previous years and this year as well most other sorts of debts.
Liability orders and bailiffs
When you get a letter saying that a Liability Order has been granted, phone the council straight away even if you can’t pay it in full.
Make an arrangement to pay
If you can get an arrangement to pay set up, the debt won’t be sent to the bailiffs.
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.
Deductions from benefits
You may be able to pay it by deductions from your benefits:
- 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;
- if you are on Universal Credit, 5% of your “Standard Allowance” can be deducted. The money you get for your housing costs will not be affected.
It’s already been sent the bailiffs
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, 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 2019-20 and you may assume that is all you owe… but you may also have debts from previous tax years that 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. Always ask 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.