Government announces new council tax collection rules

The Government has announced that is it modernising rules around council tax debt collection, as the Ministry of Housing, Communities, and Local Government responded to their modernisation consultation.

The Government announced that the timeframe before a person loses the right to pay in instalments will be extended from one missed payment to three, and at least 63 days, providing more room to repay. They also stated that they will set out statutory steps councils will have to take to support residents in arrears before engaging in enforcement action, as well as capping liability orders at £100, where previously no cap existed.

Dent charity StepChange has long been calling for more room to repay in the council tax collection process to bring it into line with modern standards, ensuring people behind have more time to access support and reach affordable arrangements.

Under previous rules, a single missed bill, followed by three reminders within a matter of days, allowed local authorities to demand a full year’s council tax charge, which currently averages almost £2,400 for a Band D property. Some councils prematurely escalate debts at this stage to bailiff enforcement, adding fees and causing distress. With one in four people (23%) having no savings set aside for a rainy day, the existing system perpetuated financial difficulty and did little to alleviate it.

StepChange’s data shows levels of difficulty around managing council tax bills, and why this change is necessary to protect those struggling. Council tax is now the second most common type of household arrears amongst StepChange clients, with almost one in three clients (31%) behind on the charge.
Average council tax arrears top £2,531 year to date, around double the average from before the pandemic.

Over one in three (36%) UK adults are worried about their ability to pay their council tax over the next six months, a figure which has increased by 13% since January. This comes as the 5% average rise hits bills.

Vikki Brownridge, Chief Executive Officer at StepChange Debt Charity, said “Being hit with such a large bill at short notice has for too long been a massive hurdle for people attempting to get back on the road to financial stability. Changing the timeline escalation from one missed payment to three will positively mean households have more time to engage constructively with their local authority, seek debt advice, and reach affordable arrangements, ultimately giving them more room to repay.

“What’s more, introducing, for the first time, statutory steps councils have to take to support residents ahead of enforcement action, as well as a cap on liability orders, will ease the burden on our clients and residents struggling with council tax arrears and managing their payments.”

“But whilst this is a step forward, to truly make council tax debt collection a fairer and more modern system, the Government should go further by scrapping the outdated sanction of imprisonment for non-payment, a measure that has already been removed in Scotland and Wales and simply does not belong in the 21st century.”