Council tax arrears hits £6.6bn

Latest figures published by the Ministry of Housing, Communities, and Local Government show that council tax arrears have increased by over £600 million, with total debt reaching £6.6 billion, an increase of over 80 per cent since before the pandemic.

The data reveals 400,000 more households fell into council tax arrears between 2022 and 2024, with 1.8 million people now in arrears with a significant number facing serious personal and financial challenges such as ill health, bereavement or job loss.

The news comes in the shadow of the recent Spending Review and warnings from the Institute of Fiscal Studies that council tax is set to rise at its fastest rate for 20 years. Many councils are planning annual increases of up to 5 per cent to address funding shortfalls.

A report by the Centre for Social Justice found that  97 per cent of those in council tax arrears exhibit at least one sign of personal vulnerability (compared to 47 per cent of the general population).

People in council tax arrears are three times more likely to be in poor health. They are twice as likely to have experienced negative life events such as job loss, bereavement or relationship breakdown.

Those who fall behind on council tax report experiencing negative impact on their mental health (54 per cent), threats of legal action (39 per cent), aggressive collection practices (24 per cent) and strain on relationships with family and friends (24 per cent).

The report also finds that the average amount of council tax debt held by those seeking advice from debt charities has more than doubled in a decade, from £756 in 2013 to £1,726 in 2023.

Matthew Greenwood, Head of Debt at the Centre for Social Justice, said “With local government on its knees and council tax arrears at record highs, those people who don’t pay their council tax even though they have the money should face the full force of the law. But our report shows that the vast majority of those in arrears are not refusing to pay – they’re simply unable to, often due to poor health, job loss or other negative life shocks.

“Under the current rules, missing just one payment can make someone liable for the entire year’s bill within weeks, triggering bailiff action and, in some cases, the threat of imprisonment. It’s an outdated, punitive system that fails to distinguish between those who won’t pay and those who genuinely can’t.

“The Government must now deliver on its pledge to end the unfairness in council tax collection and help put millions on a path to repaying their bills.”

John Pears, UK CEO at Lowell, said “This report highlights what we at Lowell have seen for some time. Many people struggling with council tax debt are also dealing with complex, often hidden, personal challenges. The current system doesn’t always allow for these realities. It can make it harder for people to get back on their feet.

“The Government’s recent commitment to reform bailiff oversight is a welcome first step, but the work doesn’t stop there. Meaningful change is desperately needed to protect the most vulnerable.

“It’s not going to be easy, and councils can’t do it alone. That’s why we’re working with the CSJ, councils, MPs and debt charities to drive reform, bring standards up across the country and build a system that works for bill payers and councils alike.”

In addition to Government figures, YouGov polling for StepChange found that for those earning under £35,000, close to the median UK salary, 41% of are worried about meeting their council tax payments.

The polling also found that almost two-thirds of people (63%) are saving less because of increases in essential household bills like council tax. Over one in three (35%) of StepChange clients are in council tax arrears, and between financial years 2023/2024 and 2024/2025, council tax arrears amongst StepChange clients have increased by 16%, from £1,805, to £2,094.

Peter Tutton, Director of Policy, Research and Public Affairs at StepChange Debt Charity, said “These figures today are unsurprising and point to a broken system which is repeatedly pushing the most financially vulnerable groups into hardship, as councils scramble to fund essential services against an incredibly difficult financial backdrop. As such, households across Britain have faced significant increases in their council tax payments, all coming at a time when other bills and general living costs are going up across the board. Despite the best efforts of some councils, local authorities lack a binding set of standards which would create an environment to better support people in arrears facing financial difficulty.

“As it stands, existing practices around council tax debt collection only exacerbate financial difficulty and the reality is that the current system lacks compassion and clarity. Our previous research has consistently shown these debt collection practices are worsening people’s mental health and wellbeing – over four in five (85%) StepChange clients with council tax arrears said the communications they received from their council about their arrears made them feel scared, anxious or depressed.

“The Government’s recent publication of a consultation on council tax debt collection reforms marks an opportunity for real change. We are calling on central Government to reform existing rules around council tax debt escalation, including the punitive regulation which means one single missed council tax payment can lead to your council demanding a full year’s payment.

The report comes alongside a Government announcement that it will reform the way council tax is collected. The Ministry of Justice also confirmed that the Enforcement Conduct Board – a voluntary oversight body for the bailiff industry set up by the CSJ – will be put on a statutory footing.

Council tax arrears by calendar year per StepChange client:

	Clients in Arrears (%)	Estimated Number	Average Arrears	Percentage Change
2019	30%	99222	£ 1,146	–
2020	36%	71633	£1,292	13%
2021	37%	63356	£1,578	22%
2022	35%	65547	£1,659	5%
2023	33%	60477	£1,726	4%
2024	34%	58116	£1,972	14%