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Council Tax Arrears Debt – What Are Your Options?

bailiff stress

For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.

If you owe council tax arrears, you shouldn’t hide away from paying your council tax bill. There are ways to get out of these debts in a comfortable and affordable way, such as using an IVA. And there may be times when you can write off your council tax debt completely. 

Stick with us as we discuss everything you need to know about unpaid council tax and how you can fight back against your local authority. 

What are council tax arrears?

Council tax arrears accumulate when you miss a council tax payment and have a debt. Your arrears are classed as a priority debt and will need to be paid. 

If not, you could face court action, bailiffs and you could even go to jail for up to 90 days if you willfully neglect or reject making council tax payments. But getting sent to prison is rare. 

What happens if you have arrears?

If you have council tax arrears, the council will write to you and say you need to pay within 7 days. If you ignore your council tax arrears, you will receive a final notice asking you to pay a full year’s council tax or face legal proceedings. And the judge might ask you to pay as well…

Ignoring a judge’s instruction can result in a visit from a debt enforcement agent. These agents have to give notice before turning up and an opportunity for you to pay.

Further silence can – although unlikely – result in a prison sentence of up to 90 days.

How to deal with council tax debt

Deal with council tax debt by being proactive and never hiding from the problem. We get it, you don’t want to confront the debt because it’s scary. But not being proactive can cost you money and stress.

Search for free advice from relevant charities for immediate support and guidance. 

The easiest way to deal with council tax debt is to pay it off in full before it escalates to legal action. Alternatively, you may be able to negotiate a payments plan to spread out the cost of the debt. If you agree to this and miss a payment, the council will send a letter to your house and threaten court action again. 

What to do if you are taken to court

If it does go to the courts and the judge sides with the council, they will issue you with a liability order asking you to make arrangements to pay it back. Again, you’ll have an opportunity to negotiate repaying your council tax arrears with a repayment plan. 

Avoid paying bailiff fees!

Communicating with the council is recommended because if you fail to pay, the council will send enforcement agents (also known as bailiffs!) to come to your house and collect council tax payment and/or valuables. 

They will charge you an initial £75 just to write to you, and then give 7 clear days to pay or they will start debt enforcement with further fees of £235+. 

They may choose different enforcement actions, like trying to get the money directly from benefits like employment and support allowance.

How to clear council tax debt

If you want to clear your council debt with affordable repayments, and you are unsure what you can afford or how to go about it, there are people who can help with free debt advice.

bailiffs advice

Debt charities are trained to help with council tax debts across England, Wales and Scotland. They will help you communicate with local authorities and come up with a payments plan you can comfortably afford by helping you budget accurately. 

Pay council tax with their free support by finding the charity that’s right for you!

How to get council tax debt written off

You can get council tax written off as part of a bankruptcy application. You can also get council tax debts written off within some other debt solutions, such as an IVA or DRO:

  1. Individual Voluntary Arrangement (IVA)

An Individual Voluntary Arrangement (IVA) is a debt solution where multiple larger debts are consolidated into a legally binding payment plan typically lasting five years. Although the debts remain separate, you make one monthly payment which is proportionally split between all creditors/councils. The IVA is made by a certified insolvency practitioner who communicates with your creditors and any councils. 

Once the IVA term finishes all outstanding debt is wiped, meaning you can wipe some of your council tax debt once the IVA has finished – along with any other debts named within the IVA.

  1. Debt Relief Order (DRO)

Another debt solution that could help wipe all your council tax debts is a Debt Relief Order. This is a solution for people with less than £75 disposable income each month. The DRO prevents creditors and councils from chasing a debt for 12 months. 

After this period, if the financial circumstances of the debtor have not improved, allowing them to pay council tax debts comfortably, the debt is wiped immediately. Your debt cannot exceed £30,000.

Another way to not have to pay!

Another way you will not have to pay council tax debts in England or Wales is if the debt is older than six years old and you have never been given a liability order to pay. In this situation, the debt is likely to be Statute Barred

Simply put, the council can never take you to court, and subsequently, you will never face a bailiff visit and can never be forced to make payments.

What about Scotland?

In Scotland, things are a little different. Their equivalent to Statute Barred exists, but it doesn’t include local council tax debt. Instead, you would have to wait 20 years for the debt to become unenforceable. 

You can contact your local authority to tell them the debt is too old to be enforced using this letter template!

What happens to council tax debt when someone dies?

Council tax debts can be paid through the deceased’s estate, or they might have to be paid by anyone else living in the property, even if they were not named on the account.

When someone dies, their debts are usually paid from what they leave behind. And if they don’t have enough money to pay their debts, the estate is termed as insolvent and debts are paid in priority order. It is possible that a debt will die with the person – but that’s not exactly how it works for council tax. 

Council tax debt after death

If you lived with someone who paid council tax and you were not named on the bill, in the event of their death, you will be liable to pay the local council back.  

Note: If you are now the sole occupier of the property, you will be eligible for a reduction. People with a low income or on state benefits like universal credit allowance, income support or pension credit may qualify for a reduction too. Contact your respective council for information on reductions. 

Can you get a council tax reduction?

You can get a council tax reduction if you live alone, live with non-payers, such as full-time students, apprentices, diplomats and other qualifying adults. You can also reduce your council tax payments if you have a low income and receive some benefits, such as income support pension credit, employment and support allowance, universal credit or jobseekers’ allowance. 

Charities will also provide advice on these types of discounts. 

Can I backdate a reduction?

You can typically backdate a reduction easily for six months. However, you can apply to backdate council tax overpayments until you started paying, but you may need to provide extensive evidence and an explanation as to why you never applied for a reduction. 

What happens if you wrongfully claim a reduction?

If you claim a deduction you are not eligible for, you can be charged penalty fees up to £1,000. If you make a mistake applying for a reduction and then notify the local authority, you can avoid paying any fees. 

Incorrect reductions can be backdated too, which can put you into arrears. 

What happens if you ignore a council tax bill?

If you have not been paying your council tax, you should expect the local authority to send you a reminder asking you to pay all the outstanding council tax on your account. They will tell you that you must pay within 7 days.

If seven days to pay is not enough or you have trouble paying what you owe, it is best to reach out and speak with the council – and hopefully agree on an affordable payment plan. 

If you do nothing, the local council will send a final notice. This letter will ask you to pay a full year’s council tax (the remainder of the financial year) or face legal action. If they do take legal action, your debt can increase.

Here is what can happen if you ignore a reminder to pay the money owed:

  1. Liability order

The council may ask the court to issue a liability order, which essentially makes you legally responsible to pay the unpaid council tax money. The £20 fee will be added to the debt. 

  1. Debt enforcement 

If you haven’t already, it’s best to get free debt advice from a charity at this stage. 

The council can then use the court order to enforce the debt, i.e. take further action to make you pay. They could:

  1. Use an attachment of earnings to take payments from your wages or from DWP payments you receive. Your employer could be forced to pay some of your weekly or monthly wage to the court, and they will then send this to pay the tax. 
  2. Use a charging order to take the payment owed from any property sale
  3. Make you bankrupt (in specific circumstances!)

But the most common action taken is to use bailiffs. 

What to expect from council tax bailiffs

Enforcement agents, otherwise known as bailiffs, will send you a letter asking you to pay the council tax you owe. 

Seek advice from a charity if you are dealing with a bailiff company!

They will send a notice letter asking you to make a full payment or contact them to agree to a CGA, which is a repayment plan secured against your possessions. If you don’t do anything within 7 days (not including holidays and Sundays), the bailiffs will attempt to come to your property and seize possessions which are then sold at auction to pay the council tax debt off. 

Paying council tax debt back becomes more expensive at this stage, as you will need to pay bailiff fees, including an initial £75 for sending you the first letter. If the bailiffs have to visit you, fees are an additional £200+.

Ignoring bailiffs can be costly!

Can you be sent to jail for council tax arrears?

You can be sent to prison for up to three months if you do not pay your council tax arrears. But it is quite rare to go to jail unless you have willfully neglected the debt or rejected all types of payment. 

In 2019. The Guardian newspaper reported that an average of 51 people were imprisoned for these types of debts between 2013 and 2019. 

If the local authority still doesn’t get your council tax payment, they can apply for a hearing at the Magistrates’ Court. You will be summoned and you must attend or an arrest warrant can be issued. 

If the judge believes you have willfully rejected the debt, they may send you to prison. If you do go to jail for unpaid council tax, you are still required to pay this tax, as well as your arrears.

How long can you be chased for a council tax debt?

In England and Wales, your council tax debt can be chased until it becomes Statute Barred as per The Limitations Act 1980. The council will have six years until the debt originated, or until you last paid towards it, to collect the money. After this time, the debt becomes legally unenforceable. 

However, in Scotland the situation is different and local councils there have 20 years. Scotland has the equivalent laws, but council tax debts are not covered within those equivalent laws.

It is unlikely that a council will not track you down in either of these timeframes. 

Seek advice if you think your debts are legally unenforceable and shouldn’t be asked to make a payment.

Can council tax arrears be written off?

Some councils will write off council tax debts if the debts are not likely to ever be repaid, such as in severe financial hardship. Other ways to write off these debts is to use a Debt Relief Order (DRO).

This is a debt solution for people with limited disposable income and no valuable assets, such as a house. The DRO will ban all creditors including a council, from making contact to ask for a payment, or threaten bailiff action, for one year.

At the end of this year, if the debtor’s financial situation hasn’t improved, all debts are written off. 

Can I make a complaint about my local authority?

If you think your council has acted inappropriately or is making a mistake, you should lodge a complaint directly to the council. 

Search more answers to council tax FAQs

If you want more helpful guides and answers to questions relating to council tax debt, look no further than MoneyNerd. 

We discuss and dissect every aspect of being chased and made liable for these types of debts in our dedicated council tax debt hub.

Take a look now and find answers without the jargon!

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