Council Tax Debts

Often our clients have council tax arrears either from the current or from previous years which is includable in a payment plan with some of it written off.

Paying your Council Tax

The original legislation allowed for payment over ten months. Now there are options such as over 12 months, or weekly over the counter at your local council offices. If you are a council tenant, you can pay weekly at your local housing office.

You can also use Paypoint, Payzone or Quickcards for cash payments at post offices, banks, newsagents and convenience stores.

Can I get a discount?

You should check if you’re eligible for:

  • council tax reduction if you’re on a low income or get benefits.
  • You can apply for a reduced council tax bill if you live on your own or are the only person liable for council tax in your household. Under 18’s and live in carers are not liable for council tax.
  • Severe mental impairment discount. If someone has a diagnosed SMI, which includes Alzheimer’s, Parkinson’s, strokes and more, they don’t have to pay council tax if they live alone, and get 25% off if they live with one other grown-up. Plus some councils backdate it.
  • Band lowering due to disability. If you live in a larger property than you would need if you or another occupant were not disabled, eg, you have an extra room for treatment or space to use a wheelchair indoors, you may be able to lower your band.

Every year, over 1 million bailiff referrals are made for payment of Council Tax Debt. (Source:

What happens if I miss a Council Tax payment?

Your council will send you a reminder notice giving you seven days to pay if you miss a payment. If you don’t pay within seven days, you’ll have to pay the whole year’s Council Tax instead.

You are sent a second reminder notice if you miss another payment.

You’ll only get a maximum of 2 reminder notices in a financial year – which runs from April 1 to March 31.

Your council will send you a final notice saying you must pay the whole year’s Council Tax if you miss a payment for the third time.

What happens if I fall into arrears with my Council Tax?

Council tax is a priority debt, whether it’s your current bill or arrears. Priority debts are of high importance because the consequences of not paying them are more severe than other debts.

Local authorities have increased legal powers to collect council tax if you miss payments. They can collect the debt by:

  • Sending in bailiffs
  • Setting up an attachment of earnings, where the money owed is taken directly from your wages or benefits.
  • Issuing a charging order (rare)
  • Petitioning to make you bankrupt (rare)
  • Imprisonment (very rare – extreme cases of refusal to pay and fraudulent behaviour and for a maximum of 3 months)

Council Tax debts and IVAs

Your council tax is one of the most important household bills. If you enter into an individual voluntary arrangement (IVA), then it must be dealt with one way or another.

Council tax arrears from previous years

Council tax arrears from previous years are included as a creditor in the IVA.

Council tax for the current year

This, for years, has been a grey area.

Sometimes it is an expenditure item; sometimes it is included as a creditor.

Either way, it does not make any difference to you, the IVA holder.

In the context of an IVA, debts are referred to as either an expenditure item or included as a creditor.

An expenditure item

When entering into an IVA, a calculation is made to determine your available disposable income.  This establishes how to much you to have to pay towards your non-priority debts once you've paid for your living expenses, important obligations and priority debts. Your available disposable income is how much you pay into the IVA.

So, priority debts and other important obligations are said to be excluded from an IVA but are an expenditure item used to determine the IVA payments.

Included as a creditor

A creditor in an IVA represents a negotiable debt. It is these debts which are said to be included as a creditor in the IVA and cleared once the IVA completes.

If the current year’s bill included as a creditor, in the IVA then that raises your disposable income to pay into the IVA until you need to make payments for the next years bill. At that point, your IVA payments are lowered to allow you to afford this.

If the current year’s bill is an expenditure item, that lowers your disposable income to pay into the IVA.

Factors influencing how the current year’s council tax is treating include:-

  • who the council is and their voting habits,
  • the total share of the debt owed to the council,
  • if there are arrears from previous years,
  • is the current year in arrears? and the point in the year we are at,
  • the view of the insolvency practitioner

Note. If there are multiple names on your council tax bill; each is equally responsible for paying the entire amount. If you enter into insolvency, then the other named parties must pay the whole amount unless they enter into an IVA or other form of insolvency at the same time you do.

Please call 0800 014 9675 or a contact us if you have any questions or require some assistance with your debts.