Help with Council tax debts

This page can help should you want to know if an IVA or DMP can help with Council tax debts. You’ll also find details on how to check your eligibility for Council tax discounts and see what happens if you don’t pay Council tax.   

Council tax arrears are classed as a priority debt. This means non-payment could result in the removal of goods from your home by bailiffs. In some cases it can also lead to imprisonment.

Council tax debts process

Once a Council tax payment has been missed you will normally be sent a reminder to pay the most recent instalment within seven days of receiving the notification.  Should you pay within the seven day timeframe you can then continue to keep paying by instalments as normal.

Failure to pay within the seven day period then means that you forfeit the right to pay by instalments. As a result you will be issued with a further notice to pay the remaining amount of Council tax for that year. The full amount will need to be paid in full within seven days of receiving the second notice.

If you fail to pay the outstanding balance within the next seven days the Council can then issue a liability order through the Magistrates court.

What happens if you don’t pay Council tax?

Once a Council tax arrears issue reaches a magistrates court, they can decide to issue a liability or in extreme circumstances a committal to prison order.

A Liability Order allows the court to pursue payment of the debts by the following means:

  • Attachment of Earnings (order your employer to deduct a regular amount from your wages)
  • Appointing a bailiff to seize goods to cover the debt
  • Bankruptcy

Attachment of Earnings Order

If a Council Tax debt that you owe is subject to a Liability Order then the Council may issue an order to your employer or benefits agency to take direct deductions from your benefits or salary until the debt is clear. The Council can issue a maximum of two Orders for Earnings and one Order for Benefits. The deduction rate for an Attachment of Earnings Order will vary depending on your net earnings.

Attachment of Benefits Order

If you receive any of the following benefits the Council can request an Attachment of Benefits Order – this means payments are taken directly from state benefits and go towards Council tax arrears:

  • Income Support
  • Job Seekers Allowance
  • Employment Support Allowance
  • Guaranteed Pension Credit
  • Universal Credit

The Council can also request an attachment of benefits if a payment arrangement fails or the customer does not make payments towards the arrears. If a customer requests an attachment of benefits this can be put in place for them by their Council.

The deduction rate for Attachment of Benefits is set by the Government and is reviewed annually. The current rate is around £3.70 per week. However this can vary and should be discussed with your relevant Council or benefits office.

Bankruptcy

Arrears on payments can be pursued through a bankruptcy petition. For more details see our section on Bankruptcy.

Discounts on Council tax

In some circumstances  you should check if you are entitled to a discount on your Council Tax bill. This could help save money and be better for your personal finances.

You may be able to reduce your Council tax bill on the following grounds:

  • The property is empty (in the case of a property you own but don’t live in)
  • Only one adult lives there – remember, certain people aren’t counted when working out the number of adults
  • You are disabled
  • You are a student
  • You are a student nurse
  • If the property isn’t your main home

If you’re on a low income you could also qualify for Council tax benefit.

To check your eligibility visit gov.uk and follow the instructions.

A full Council Tax bill is based on at least two adults living in a property. If only one adult lives in a home (as their main home), the Council Tax is reduced by 25 per cent. The bill doesn’t increase if there are more than two adults in the home.

Certain people aren’t counted when working out the number of adults who live in your home. If the property isn’t the main home of the people living there then a discount may also apply.

If you are experiencing payment difficulties, speak to your local Council who may help set-up a repayment schedule.

Liability Orders issued on Council tax arrears from a previous year

If a liability order has been issued then we can negotiate on your behalf. We can include the payments as part of a financial management plan, allowing affordable payments, alongside other creditors.

We can include such debts subject to a court order as part of a financial management plan. If bailiffs are instructed, we advise our clients to not let them in to the property and to call us immediately.

If bailiffs have already entered your home and marked or listed items for seizure then we are not able to include the debt as part of a financial management plan or financial statement.

If a customer makes an arrangement directly with the Council for any Council tax arrears then this can be included in their financial statement for expenditure.

How Harrington Brooks can help with Council tax debts

Many people come to us with Council tax arrears in addition to other debts. Some also advise us of such arrears once they are on a plan.

Our clients complete a common financial statement. This details their income and essential expenditure, within guidelines acceptable to creditors. It helps define how much they can afford to pay towards their debts. Council tax payments are classed as priority payments, so these must be taken into account before consideration is given to other lower priority debts, such as unsecured loans.

Council tax payments for current year – DMPs and IVA guidance

For a DMP these payments are included in the financial statement as an essential expense but cannot be included as a creditor. For an IVA current year arrears can be included on an IVA.

Council tax arrears for previous year – DMPs and IVA guidance

If a Liability Order is not issued on Council tax arrears from a previous year our customers have two options:

  1. We can include these debts as part of a Financial Management Plan or an IVA, treating the local Council as we would any other creditor. We would make an offer of payment to them, based on what they can afford.
  2. The customer can agree repayments directly with their Council. These catch-up payments are included in the financial statement as an essential expense in addition to the current year’s payments.