Many people in council tax arrears can’t afford to pay debts

Research from Citizens Advice finds that many people in council tax arrears can’t afford to pay their debts, with four in 10 having no money left at all after covering living costs.

Most people in council tax arrears have an average of just £7 left at the end of the month after covering their living costs, with nine in 10 of the people who seek help from Citizens Advice with council tax debt also owing money on other household bills, most commonly water and energy costs.

However, outdated government regulations are forcing these people into sometimes desperate hardship, pushing councils to use the courts to recover council tax debts which can add legal costs and bailiff fees to the debt. A 2019 Freedom of Information request revealed that, for every £1 of debt referred to bailiffs by councils, only 27p is ever returned to them.

The charity says the rules also mean people become liable for the full annual bill two weeks after a missed payment. This means that missing an average council tax payment of £167 in the first month of the financial year can escalate to a debt of over £2,000 in just nine weeks. This is almost 300 times the monthly amount available to the average person seeking support from Citizens Advice on council tax arrears.

Dame Gillian Guy, chief executive of Citizens Advice, said: “Government regulations push local authorities to use harsh collection processes. They pile rapidly-escalating debts on people who barely have enough money to get by.  Many people who need our help with council tax arrears have no more than a few pounds spare every month to repay their debts. An unexpected bill for thousands of pounds, accompanied by legal threats and bailiff action, is terrifying for the person concerned and ineffective for the council trying to recover the debt. To protect people from further harm, the government must change the rules to give councils the flexibility to collect council tax fairly and compassionately.”

Richard Watts, chair of the Local Government Association’s Resources Board, said: “Councils have a duty to their residents to collect taxes so important services, like caring for older and disabled people, protecting children, fixing roads and collecting bins are not affected. They strive to recover unpaid tax as sympathetically as possible and to provide support to households at risk of financial exclusion or hardship.  

“As the Citizens Advice report makes clear, this needs to be supported by better guidance and funding. Councils would be in favour of it being made easier for them to recover money without having to use bailiffs, and would support the removal of the requirement for the entire annual sum to become payable if an instalment is missed. Bailiffs should only ever be used as a last resort by councils. Before it gets to that stage, people will have been encouraged to apply for financial support by their council. Anyone having trouble paying their council bills should get in touch with their local authority for financial help and advice as soon as possible.”