£3 billion of outstanding council tax debt last year

Citizens Advice has found that ‘outdated and punitive’ council tax regulations are contributing to serious financial harm as local authorities are encouraged to collect arrears aggressively.

The research shows that missing an average council tax payment of £167, in the first month of the financial year, can escalate to a debt of over £2,065 in just nine weeks. This is due to someone becoming liable for the rest of their annual bill after only two weeks if they have fallen behind on their council tax bill. Two types of fees are then added on top of the original tax debt: court costs (typically £84) and bailiff fees (commonly £310).

Citizens Advice estimates that over £560 million in fees were added to people’s council tax debt in 2016/17 alone, including £300 million of bailiff fees, which often have to be paid by the person in debt before any council tax arrears can be recovered by the local authority.

Government data shows that there was over £3 billion of outstanding council tax debt (excluding fees) in 2018. An estimated 2.2 million households were behind with their council tax in 2017/18 out of 24.2 million that are liable to pay council tax. This is nearly 10 per cent of all households. Since 2010, the amount of council tax debt has grown by 30 per cent.

Gillian Guy, chief executive of Citizens Advice, said: “By forcing local authorities to use rigid and outdated collection processes, council tax regulations make it harder for people to pay their original debts instead of helping them to get their finances back on track.

“Through its council tax collection review, the government must fundamentally reform the regulations governing how local authorities collect debts. Punitive processes such as charging a full year’s bill after a single monthly payment is missed show how broken the system is - they both tie the hands of councils and force people into debt.”