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Call for changes after a £167 council tax debt can escalate to over £2,000 in just 14 days

Friday, 26th April 2019

Citizens Advice are calling for new rules in the way council tax arrears are collated saying the current system is ‘Outdated and Punitive’ which causes serious financial harm to householders.

Their research found that missing an average council tax payment of £167, in the first month of the financial year (April), can escalate to a debt of over £2,065 in just 9 weeks.

How the fees add up

When someone responsible for paying the council tax miss a payment they become liable for the whole of their yearly bill after only 2 weeks. Two types of fees are then added on top of the original tax debt: court costs, typically £84 for a liability order and £310 on average for bailiff fees.

Citizens Advice estimates over £560 million in fees were added to people’s council tax debt in 2016/17 alone. This includes £300 million of bailiff fees which is particularly concerning as some of these fees have to be paid by the person in debt before any council tax arrears can be recovered by the local authority.

Why the rules need changing

The Citizens Advice want the rules changed so that the full year of council tax no longer falls due after just one missed payment as well as the threat of imprisonment for non-payment.

Nearly one in ten households (9%) in England fell into arrears on their council tax payments during 2017-18. Council tax is often not paid due to difficulty in meeting other essential household bills. When the householder is then sent a huge bill for the remaining term of the yearly council tax bill all this does is compound the situation further by putting the householder’s finances under even more strain.

The government has confirmed it is reviewing the way local authorities collect council tax and the Citizens Advice wants changes made to the legislation governing this to include:

  • Removal the threat of imprisonment for council tax arrears in England
  • Remove the current requirement that the entire council tax bill is to be paid if one payment is missed
  • Make it statutory guidance that councils must attempt to develop an affordable repayment plan for the arrears before taking the debt through the courts
  • Allow councils to collect debts without having to use legal processes - such as a court order, this will remove the additional fees incurred that is paid by the person already in debt

Priority debt

Council Tax arrears is regarded as a 'priority debt'. This means it has to be paid before unsecured debts such as credit / store cards, catalogue, payday or bank loan.

Gillian Guy, Chief Executive of Citizens Advice said:

"Council tax regulations make it harder for people to pay their original debts instead of helping them to get their finances back on track." Full press release here

Mike Thomas, Founder of DebtWizard, commented:

"Unfortunately, some people either forget or do not realise that Council tax is a priority debt and non payment can be very serious. This has to be paid in advance of any credit/store card, bank loan/overdraft or payday loan, basically before you think about paying your unsecured debts. I have known of several instances where people have been made bankrupt by their local council, this has led to the home being repossessed."

"Those struggling with this form of debt and/or have other difficulty paying other debts should get get professional help and advice fast before the matter gets out of hand. The proposed changes to the way council tax debt is calculated will take time to become law which means people need to act now to avoid thousands of pounds in legal fees as well as added interest on any arrears."

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Related reading

Council tax problems - 5 ways to help you pay

New guidelines for council tax arrears collection launched

How council tax arrears of £5,000 could easily cost the home owner £20,000 in as little as three years




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