What is council tax?

Council tax is an annual fee that is paid to your local authority (council). This money is used by local authorities for a huge range of public services, including:

• Local police and fire services
• Bin collects and local waste disposal facilities
• Parks, leisure centres, and other recreational spaces
• Street cleaning
• Road maintenance
• Street lighting

You’ll usually get a council tax bill every year. When you do, you can either pay it in full or set up a payment plan. Most people pay their council tax in 10 payments through the year (with a break during February and March) – although it’s possible to talk to your local council and arrange to spread it over 12 months instead.

If you decide to pay over 12 months, your payments will be lower – but you won’t receive that two month break.

Who has to pay council tax?

Everyone is expected to pay council tax – although there are a few exceptions to the rule. These rules are outlined in an act called The Local Government Finance Act 1992. You can read the full version here – but as a brief overview, these exceptions include:

• When the property is empty due to a death
• If the property is empty due to the occupier(s) being cared for elsewhere
• If the residents have severe mental impairments
• If all the residents are under 18
• If all the residents are full-time students
• Self-contained flats where a dependent lives
• Properties owned by charities

If you think you shouldn’t be paying council tax, give your local council tax helpline a call or visit the council tax section of the government website. They’ll explain what you need to do and may even issue a refund if you’ve paid when you didn’t need to.

Can I get a discount on my council tax?

As you can see, it’s only in very specific circumstances that a property becomes excepmpt from council tax – but there are more circumstances where local councils apply a discount. You may be entitled to a discount if:

• You live with someone who is exempt from paying
• You live alone (or just with dependants)
• You claim certain benefits (including Universal Credit, Employment and Support Allowance, Pension Credit, and some others)
• You are on a low income
• You are experiencing serious financial hardship

Again, if you find yourself in one of these circumstances and think you might be eligible for a council tax reduction, it’s always worth calling your local council tax helpline or dropping into your council offices to discuss this with someone.

How much council tax should you be paying?

There are lots of factors that a local council consider when they put together council tax bills. Your exact council tax payment will be based on your personal and financial situation – as well as the overall amount they need for local services.

The other main factor is the size and value of the home you live in. Council tax is divided into ‘bands’ – running from A-H. The more your house is worth, the higher the band and the higher your bill will be.

If you think your house is in an incorrect band, your council will have a process that you can go through to have it reassessed. You’ll be able to talk to someone at your local council offices if you’d like to explore this in more detail.

Can you get put in prison for council tax debt?

There are lots of scare stories in the press about how you can be sent to prison for not paying your council tax. While it is possible that a court could sentence you to prison – it’s extremely unlikely and is an absolute last resort.

In the rare instances that this does happen, a custodial sentence is reserved for people who have been asked to pay a number of times, have already been to court and had bailiffs visit – but still refused to pay or stick to any kind of payment plan.

If you get to this stage and haven’t found a way to work on your arrears, you should seek immediate independent financial advice to help find the right way forward.

Setting up a payment plan if you owe council tax

It’s absolutely normal to have a sense of anxiety about talking to anyone you owe money to – but if you’re struggling with council tax payments, talking is one of the best things you can do.

Every day, council offices deal with countless calls and visits from people who can’t afford to pay some or all of their council tax. They usually have facilities set up for this – including payment plans that will help you get caught up with what you owe.

If you’ve recently missed a payment, it’s a good idea to speak to someone at the council and let them know that you’re aware. Even if it’s an honest mistake or something you think will just be a one-off, councils have a debt collection process, and if they don’t hear from you, this could involve legal action and council tax bailiffs visiting your property.

What are your options if you’d like to have council tax debt written off?

There are a couple of different options to consider if you’re hoping to have council tax debt written off.

Let’s take a look at both in detail:

Option 1. Asking your local council to write off council tax arrears

Your local authority may have the power to write off any debt you have relating to council tax. Again, this is something covered in the Local Government Finance Act 1992 – specifically Section 13A (1)(c).

A word of warning though – it’s very unlikely they will even consider this. These rules were originally set up for use if your home cannot be used because of a fire or a flood – although they are sometimes used if you’re facing serious financial hardship, or facing serious physical or mental health issues.

Every council has their own policy on writing off unpaid council tax, and some just will not do it under any circumstances. However, it’s worth exploring if you really feel like you just have no way of making a payment.

If you think your local council may consider your circumstances, you should contact them about discretionary relief – quoting s13A Local Government Finance Act 1992. They will ask for more details and will usually ask for proof from you about the hardship that you’re facing.

As with anyone you owe money to, it’s always better to get in touch before a payment is missed. If you think you can’t make your next payment for any reason, get in touch with your local council offices as soon as possible and talk about your options.

Option 2. Looking into debt solutions

Another option you may decide to look into is a formal debt solution.

These kinds of agreements include Individual Voluntary Arrangements (IVAs) and Debt Relief Orders (DROs).

These options are called ‘formal’ debt solutions because, if agreed, they become legally binding – which means you and the creditor (the companies you owe money to) sign to say you’ll follow the terms of the agreement.

The process is a little longer than talking to your council, but if you apply, the Insolvency Practitioner you speak to will make sure any action that’s currently being taken against you is put on hold until there’s a clear way forward.

Debt solutions like these don’t just work to write off council tax arrears – they’ll include all the unsecured debts you have outstanding – including any arrears.

How would a debt solution work if you’re behind on your council tax bill?

You start the ball rolling with a debt solution by talking to Insolvency Practitioners (IPs). The representative you chat with will ask some questions about what you owe and your personal circumstances, then look into whether or not you’re eligible.

If you are eligible, the IP company will take over all communication with your creditors. They will take a detailed look at your finances and help you understand how much you can afford to pay towards your debts each month. They will always make sure you have enough money to cover all your bills (including on-going council tax) and living expenses going forward.

With the amount of money you have left over, they will suggest one monthly payment that you’ll make directly to the IP. They will then divide this amount up over a number of years (usually five years) and make small repayments to each of your creditors out of this amount. When the debt solution comes to an end, any amount of council tax (or any other debt) that’s left over will be written off completely.

As you can see, the full amount of your council tax isn’t strictly written off – but anything that remains after your debt solution is completed will be. During this time, creditors cannot take any further action against you and will not contact you – so this option can be helpful if you’re losing sleep over money owed elsewhere.

Will council tax debt be automatically written off after 6 years?

You may have heard people talk about how debt can be wiped out if you avoid paying it for 6 years. In reality, this is almost never the case but it’s worth digging into the subject in a little more detail in case you’re under the impression avoiding paying council tax for a number of years is something to consider.

In short, trying to avoid paying council tax for 6 years isn’t just a bad idea – it also won’t work – and will almost certainly leave you in a very poor financial situation with your credit rating seriously damaged.

There’s a part of the law that says debt that hasn’t been paid or acknowledged for 6 years is considered ‘unenforceable’. This isn’t ‘writing off’ the debt – it just means that the creditor you owe can no longer take action to get any money back.

However, there are a significant number of factors that stop this 6-year rule from coming into force. One of them is if a creditor has applied to the court to get a County Court Judgement (CCJ) against you – ordering you to pay. If they have (and a council will have almost certainly will have done long before 6 years is up) then the Statute of Limitations no longer applies.

So, if you were to mistakenly believe that you simply need to sit-out 6 years to see your council tax written off, you will be disappointed – and you will have 6 years worth of Court Enforced council tax debt to pay back. You may have even got an attachment of earnings in the meantime – where your local authority is given permission to collect council tax arrears directly from your monthly salary or benefits payments.

What should you do if you think your council is treating you unfairly?

Councils have laws and guidelines to follow around collecting council tax and how they treat you if you’re struggling with payments. However, this doesn’t always mean they get it exactly right – so there are ombudsman services in place if you need to raise your complaint to a higher level or get an objective second opinion.

• In England – Local Government Ombudsman
• In Scotland – Scottish Public Service Ombudsman
• In Wales – Public Service Ombudsman for Wales

Are you struggling with council tax debts?

If you’re having trouble paying your council tax or getting caught up with previous months debts, you’re not alone and there is support for you.

If you decide to talk to your council, it’s important that you do this quickly – ideally within two weeks of the missed payment and before you are issued with a final notice. You may decide to talk to your local Citizens Advice service before you do so you have all the information you need when you visit or call.

If you’re one of the millions of people struggling with other bills, you may decide that exploring the possibility of a debt solution is a good idea. Debt solutions have pros and cons – and they aren’t right for everyone, but if the money you owe is playing on your mind and you can’t see a way of getting caught up, talking to someone about how one might work for you could be a positive next step.