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What’s the deal with council tax?

  • 3 min read
  • 20 Aug 2020
What’s the deal with council tax?

Before the pandemic, the UK owed £3.6 billion in council tax across the country. That’s roughly 800,000 households that are in debt – and it works out as £345 million more than what was owed this time last year.

It’s likely that this figure has risen even more since the lockdown with so many people out of work. 

With this in mind, the government froze bailiff visits temporarily back in April to ease the pressure of this debt. But that ban will be lifted on 23rd August 2020 – a.k.a this coming Sunday.

The government has said that they expect councils to be sympathetic when it comes to collecting overdue tax, but as many are facing significant financial difficulties themselves, it’s likely that they won’t have the resources to exercise sympathy! 

Why is council tax so important?

Many people don’t know the importance of council tax. We pay it to raise funds for our local services such as street cleaning, road repairs, fire services, the general running of the local community, and more.

But did you know that if you miss a council tax payment, it can seriously affect your credit score? When you’re in arrears for your bill, it’s what’s known as a “priority debt”. 

This means that it has to be paid ahead of things like your debit or credit card debits. 

How does it work?

The amount of council tax that you pay varies depending on where you live.

There are 8 council tax bands, from A-H, calculated based on the value of your property and the price it would have sold for during a certain time.

  • England – 1991
  • Wales – 2003
  • Scotland – 1991, although the bands work differently
  • Northern Ireland doesn’t charge council tax but “domestic rates”, which you can read more about here

So, if I miss a payment…

The council will get in contact two weeks after your payment due date to remind you to pay within seven days. If you can pay within that time, great! You’ll not be pursued further. 

If you’re not able to pay, you should contact your council as soon as possible. They may let you pay in smaller instalments. 

But if you miss the seven day deadline (or if you’re on your third notice of late payment), the consequences can be a little bigger:

  • You may have to pay the remaining council tax balance (for the year) in one
  • The council can send bailiffs round
  • You might have to go to court
  • The council can claim the unpaid balance from:
    • Income Support
    • Employment and Support Allowance
    • Jobseeker’s Allowance
    • Pension Credit
    • Universal Credit

Is anyone exempt from paying council tax?

There are a few households that aren’t liable to pay council tax:

  • Occupied only by full-time students
  • Occupied only by people under 18
  • Accommodation for armed forces
  • Unoccupied for major repair work or structural alteration
  • Unoccupied after someone on the estate has died
  • Repossessed by a mortgage lender or liable trustee in bankruptcy

So back to 23rd August

The Money Advice Trust has been urging the government to make changes to how local councils are able to collect any council tax debt owed. With so many households having suffered in the coronavirus pandemic, a rigorous enforcement of collecting arrears could be very tough. 

And you’d be surprised by how many cases are actually sent to bailiffs. It’s not a rarity at all. In fact, in the 2018/19 tax year, as many as 1.4 million council tax debts were passed to bailiffs in England and Wales. 

So if the government want to soften the blow of debt collection, they’ll need to act very fast indeed. 

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