Council tax is an annual fee you pay to your local council, used to fund the local services the council provides. How much you pay depends on your circumstances, as well as the value of your property.
Council tax is a bill that should always be considered a priority debt, because local authorities have rights that private companies don’t when it comes to debt collection – including enforcement action from bailiffs.
Here we take a look at council tax in more detail; what council tax is, how you pay your council tax, what happens if you fall into council tax arrears, and where to get the debt advice you need it if you do.
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What is council tax?
Council tax is an annual fee your local authority expects you to pay in exchange for all of the public services you get the benefit of.
When you make your council tax payment, what the money actually pays for includes:
- Your local police and fire services
- Bin collection and waste disposal
- Leisure centres, parks, and other recreational activities
- Local libraries and educational facilities
- Street cleaning, street lighting, and road maintenance
You will normally pay council tax in monthly installments, paying for ten months of the year and having two months of the year as payment holidays.
Do I have to pay council tax?
The long and short of it is: yes, you do need to pay your council tax. The council expects everyone to pay, with very few exceptions.
Situations where you may be exempt from council tax include if:
- The property is empty due to a death
- All residents are full-time students
- The property is owned by a charity
- All residents are under 18
- It’s a self-contained flat where a dependent lives
- Any residents have severe mental impairments
- The property is empty as the occupier is being cared for elsewhere
Even if you don’t fall into any of the exempt categories, you may be able to apply for a discount. This is normally available to those who live with someone who is exempt from council tax, as well as those who live alone, claim benefits, are on a low income, or are in severe financial hardship.
How is council tax paid and when do you pay it?
Generally, payments are spread over ten months, giving you a two-month break in February and March before your new bill comes in for the following year. If you choose to pay your council tax over 12 months you will not receive the payment break, but your installments will be less each month.
People usually pay their council tax through Direct Debit or standing order. However, you can also pay over the phone, by bank transfer or by cheque.
How much council tax should I pay?
How much council tax you pay is entirely dependent on your personal and financial situation, as well as the needs of your local council. The size of your payment will be decided based on:
- Your circumstances
- How much money the council needs to properly fund its local services
- The valuation of your property
Houses of different valuations are sorted into tax brands. Bands range from A-H – the more expensive your house is, the higher the band. The higher the band, the higher your council tax is.
If you think you’re being charged for the wrong band, you can ask for it to be reassessed. This could result in you paying less. By the same token, however, you run the risk of paying more if the council updates your property to a higher band during the reassessment.
Can you get a reduction in your council tax?
There are some special circumstances in which it’s possible to have the amount you pay in council tax reduced, for example if you’re on low income. Support might be considered if you’re:
- On low income
- A student or you live with students
- Living alone, or are the only adult living in your home
- Physically disabled or mentally impaired (or you share a home with somebody who is)
- On certain benefits, including Employment and Support Allowance, Pension Credit, or Universal Credit.
For a full list of the reasons for a reduction, or to check if you qualify for one, visit the Government website’s council tax section.
What happens if you owe council tax?
The best advice is always to pay any council tax debts as soon as possible. Because it’s a priority debt, there are several measures the local authority can use against you if you fail to make a council tax payment.
This action ranges from being sent a reminder notice, to having a liability order taken against you and the court sending bailiffs to your home.
When you first fail to make a payment you will be sent a reminder notice, which gives you the opportunity to settle your debts within 7 days.
If you fail to pay within 7 days of the reminder notice
If you make an arrangement to pay within 7 days of the reminder notices, no further action will be taken against you. If you don’t pay within 7 days, however, you will be sent a final notice.
A final notice requires you to pay all outstanding council tax debt within a further 7 days. If you miss this payment, the council may take legal action against you to collect the debt.
If you fail to pay within 7 days of the final notice
If you fail to pay for a third time, the council can apply to the court for the power to collect unpaid debt from your wages. This is known as a liability order.
A liability order gives the local authority the right to forcibly take money you owe, by whatever means they deem necessary. This usually means they will deduct unpaid taxes from your income.
Even if you’re receiving benefits, you’re not exempt from the council’s right to collect. A liability order gives councils the right to deduct what you owe from benefits including:
- Employment and Support Allowance
- Income Support
- Jobseekers Allowance
- Pension Credit
- Universal Credit
If they can’t take money from your wages or benefits, there are various legal avenues councils may still pursue to reclaim your debts – including sending bailiffs to your home in order to seize your goods.
Can councils use bailiffs to collect council tax?
If they’re unable to collect the debt from your income, councils may turn to bailiff action. This allows an enforcement agent to come to your home and seize your goods – although it’s important to remember if council tax bailiffs are visiting your home for the first time, you are under no obligation to let enforcement agents in.
A liability order may see you being taken to the magistrates court for a court hearing. It’s not mandatory for you to attend, but can be a good opportunity to explain why you’re struggling to pay. If you are summoned to magistrates court for a court hearing over unpaid council tax, being asked to pay the court fees is not out of the question.
In the worst cases, non-payment of a council tax bill can lead to a prison sentence. You could be sent to jail for up to three months if the court decides you don’t have a good reason not to pay your council tax.
How long can you be chased for council tax debt?
If you aren’t paying your council tax, the local authority can chase you for that council tax bill for up to six years. Within that time frame, the council can use every power at its disposal to reclaim the money you owe.
If the council tax you owe was due more than six years ago, then the council is limited in its ability to chase the repayment. They will not be able to apply to the magistrates court for a liability order, for example, meaning they can’t recover what you owe by taking it from your earnings.
While the court is limited in its ability to reclaim council tax arrears that are more than six years old, it is important to note that it’s very rare for a local authority to allow a council debt to accrue for six years in any case.
Can council tax arrears be written off?
Councils do have the power to write off council tax arrears, however it is very unlikely they will do so unless you can prove that you are suffering serious financial hardship. Each council has their own policy, so if you are looking to make an arrangement, you will need to contact the council in the first instance and seek their advice.
Council tax arrears can also be written off in some formal debt solutions, like Individual Voluntary Arrangements (IVAs) or Debt Relief Orders (DROs). If you decide to enter into a debt solution like an IVA, you will talk to an adviser about your financial situation, including every creditor you owe money to, and it might be possible to include your arrears within your agreement.
With a formal arrangement, you pay a monthly fee (however much you can afford) towards your debts for the length of the payment arrangement. Any debt you’re unable to pay during the course of the agreement (including a portion of your arrears) is then be written off.
While it is possible to write off council tax arrears through an arrangement like an IVA, formal debt solutions need to be approved by all of your creditors before they can go ahead, and there is no guarantee your local council will allow you to include your debt to them. You should seek advice before going ahead with any formal solution.
How can I get rid of my council tax debt?
Falling into debt with your council tax can be an easy mistake to make. Moving homes or misplacing your mail can mean not receiving your final bill, which in turn can leave you paying the wrong amount.
The best advice for keeping on top of your council tax is to make sure you budget for it each month. Your payments will be a fixed amount, so set it aside to guarantee it always gets paid. If you share the bill with other residents of the property, make sure they’ve also paid their share before the payment is due to make sure you’re not left short.
If you are unable to pay the arrears by the end of the year, you need to work out what you can realistically afford and contact your local authority. You can ask to spread the cost over 12 months rather than the usual ten, either in weekly or monthly installments, and they will hep you iron out any problems.
Where can I get help and advice for council tax debts?
Keeping up with council tax payments isn’t always easy, especially if you are trying to juggle other payments or priority debt at the same time. Once you fall behind, it can be hard to catch back up again. That’s why it’s important to seek debt advice.
IVA Plan specialise in debt advice, from tips and advice on paying your council tax, to formal debt solutions that take that advice and transform it into an affordable, practical debt repayment plan.
If you’re struggling with debt and need some expert debt advice, contact us now on 0808 253 3493 for a confidential chat, or complete the form on our page. From the moment you contact us, our advisers can offer you advice and guidance on your financial situation, and get to work on a repayment plan that works for you.