So if you are having problems paying your council tax, you are not alone.
This problem has been increasing for many years. Council Tax is the most common priority debt that National Debtline see – 28% of its clients in 2022 had council tax arrears
But what can you do if you have arrears?
Can you get any council tax discounts or an exemption?
Take a few minutes to check you are being billed for the right amount.
Council Tax Support
If you are on benefits or a low income you may be entitled to Council Tax reduction, sometimes call Council Tax Support.
This is one of the most underclaimed benefits in the UK. It is estimated that 2.7 million households are eligible for this but not claiming it.
Check your council’s website for how to apply – most councils have a form there you can use. You have to apply separately to your local council for Council Tax Support if you are on Universal Credit, it isn’t done as part of your UC application,
Pensioners who get Pension Credit don’t have to pay any Council Tax. So if you are a pensioner with an income below £177.10 a week (or £270.30 for a couple), check this Pension Credit calculator.
Exemptions and discounts
If you and any other adults in the house are all students, you should be exempt from council tax.
Single people should get a 25% discount. You can also get this 25% discount 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 the only person living in the house has a Severe Mental Impairment, they should be exempt. This may include dementia, Parkinson’s, severe learning difficulties or having had a stroke. A doctor must certify they are severely mentally impaired and they usually have to be in receipt of a disability benefit such as PPI or Attendance Allowance. Contact your local Citizens Advice for help to get this exemption.
Check your council website for other possible exemptions
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 in your household is disabled and requires additional space or facilities, your council tax may be reduced.
It’s a “priority debt”
Council tax arrears increase dramatically if you ignore them. 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?
Priority debts have to be paid first!
When I said council tax arrears are a priority, you may just have thought I just 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, you have to make arrangements to pay the council tax and any other priority debts.
Then what is left has to be divided between your credit cards, catalogues and loans.
A Debt Management Plan can help with this. If necessary, you can make token payments of £1 a month to non-priority debts. Your other creditors will accept that you have to pay priority debts such as council tax first.
There may be insolvency options such as a Debt Relief Order (DRO) or bankruptcy that would give you a clean start. These can wipe council tax arrears for previous years and this year, as well most other sorts of debts and CCJs.
If you can’t afford to make any payments to your non priority debts or to the council tax, then insolvency may be a good option for you, but if there is some reason why no form of insolvency is suitable there is a “last resort” option of asking your council to write off your council tax debt with a Section 13A application for discretionary relief.
If this seems confusing or impossible, talk to a debt adviser. The best places to go for help are local services such as your local Citizens Advice or a Law Centre.
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 say you have to pay the whole years tax 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, talk to a local debt adviser.
Liability orders and bailiffs
Don’t ignore a letter saying that a Liability Order has been granted – if you do the debt will be passed to bailiffs and gets a lot larger. Instead, phone the council straight away even if you can’t pay it in full.
Make an arrangement to pay
If you get an arrangement to pay set up, the council won’t send the debt to the bailiffs.
When you make an arrangement to pay, 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 think this is a payment to some other arrears 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 £3.75 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 to a bailiff
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 deal with bailiffs – 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 council. They are unscrupulous firms that are trying to get you to sign up to an IVA.
IVAs are only right for a small number of people, but they have large fees so they are often mis-sold.
Tip – check previous tax years
Councils work in tax years which run from April to March. A letter may say you owe £230 for the tax year 2020-21. But you may also have other arrears for previous years as well.
This can be very confusing. You may think you have made a payment arrangement and everything is OK. Then bailiffs send you a letter for a different tax year debt.
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!
Taking out another loan is not a good solution for a council tax problem. Getting deeper into debt makes your situation worse, especially if the interest rates are high.
It’s better to get debt advice now. If you try to borrow your way out, you will just have a larger problem in a few months.
Can’t pay your bills & debts? What help can you get? looks at the range of help you can get and where to go for the best debt advice for your situation.