Outstanding council tax debt rises to £4.4 billion

New figures show that, as of 31 March 2021, there was £4.4 billion of historic council tax outstanding in England, an increase of £841 million from 2019-20.

In 2020-21 local authorities collected a total of £32.2 billion in council tax, irrespective of the year to which it related. This was an increase of £0.6 billion, or 1.9 per cent, over 2019-20. This is lower than in previous years due to a combination of more support given to taxpayers through discounts and use of local council tax support schemes because of the pandemic, which has reduced the amount due to be collected, and a lower rate of collection.

At 31 March 2021, local authorities reported the total amount of non-domestic rates still outstanding amounted to £2.5 billion. This is a cumulative figure and includes arrears that may stretch many years. This is an increase of £1.1 billion over the figure for 2019-20. This is higher than in previous years due to the pandemic temporarily reducing or delaying recovery action during 2020-21.

The StepChange Debt Charity has warned that councils must not resort to aggressive tactics to recoup this debt and has urged the government to introduce legislation to prevent counterproductive bailiff action.

Adam Butler, Public Policy Manager at StepChange Debt Charity, said: “These stats underline how the pandemic has left many households facing increased financial difficulty. StepChange’s own research shows 4.3 million people are behind on household bills, with nearly two in five people affected by Covid falling behind on their council tax.

“While councils have a duty to pursue this unpaid tax, they also have a responsibility to ensure methods are proportionate and take into account an individual’s ability to repay. Too often, this responsibility is not met, with councils still too quick to pass council tax debts to bailiffs. As these arrears are recouped, councils must ensure they do not fall back into old aggressive methods of collection, particularly for households with low incomes like those in receipt of council tax support.”