Council Tax Arrears Payment Plan
If you’re behind on your council tax you could find yourself in more serious trouble than you might expect.
Council tax debt is what’s known as a ‘priority debt’ – and although you might not get as many calls, letters and reminders for it when compared to other money you owe, it can still escalate to legal proceedings just as quickly.
We’ll take a look at what can happen if you don’t pay a council tax debt, answer some common questions – and help you put together a plan for getting back in control this important bill.
What is council tax?
Council tax is a bill that everyone with a domestic property pays in the UK. The money it raises goes toward paying for schools, rubbish collections, police and fire, social care and much more. The amount you pay depends on a series of factors, some that relate to your home and others that relate to the local area.
Council tax is paid according to the ‘band’ your property is deemed to be in. This ranges from band A, the lowest – to band H, the highest. The band is set by your local authority and factors in numerous things about the house and the local area.
The amount you pay also depends on how many people who are eligible for paying council tax live in your home. A single eligible occupant will get a discount of 25%. Your local council will be able to give you some guidance on who should pay council tax, but generally, children under 18, students, some people with disabilities and some other groups are not eligible, so it’s worth checking.
Councils sometimes make a mistake and apply a discount when your home isn’t due one. If this is the case it’s important that you let them know as quickly as possible, as knowing but failing to act could result in fines plus a requirement that you repay any incorrect discount applied.
How is council tax paid?
You’ll get an annual council tax bill each year in March. Although this will look like a large amount – don’t worry, it’s very rare that anyone pays council tax upfront, instead, you’ll be expected to pay in 10 monthly payments.
You don’t have to pay over 10 months though, your council has to let you pay over 12 months if you ask to do so, this can bring your monthly payment down and help you predict your outgoings throughout the year.
What could happen if you don’t pay?
When you move into a property the council will issue a council tax bill in your name. If you miss any payments you’ll be sent a reminder. Assuming you pay when you get this reminder you won’t face any additional action – but if you don’t, the council will send you a request that you then settle the full council tax bill – with no option for setting up a direct debit.
Many councils will still offer some flexibility beyond this – and can often actually set up a direct debit again easily – the prospect of having to pay a year’s worth of council tax is often enough to make people pick up the phone.
Continuing to ignore your council tax
If you continue to ignore these notices the debt will continue to build up – and further action will begin.
This further action often involves reminder letters – and these are often followed by letters notifying you court action is being taken – which in turn could mean that bailiffs may attend your property to collect the debt.
In some instances, councils will take payments straight from your wages using an ‘attachment of earnings’ or take payment directly from your benefits. In some very rare instances, you could have a charge registered against your home, be made bankrupt or even be sent to prison. Don’t worry though, prison terms cannot be imposed unless you’re deliberately refusing to pay and no other method can be used to recover the money.
Putting a plan together to tackle your debt
If you find yourself owing money toward your council tax bill it’s really important to put a plan together to address the debt as soon as possible.
Our 4-step method should get you back on track and help prevent further action being taken:
Step 1: Contact the council
No matter how much you might wish it would, ignoring council tax debt isn’t going to stop it being pursued by the local authority.
Call them and explain that you’re having financial difficulties that are stopping you paying. Even if you can’t make a payment right away, talking to them opens a line of communication – this is important.
Step 2: Work out if you’re due a reduction
The gov.uk website has a useful tool that could help you work out whether you’re entitled to a reduction in your council tax bill. Many people are entitled to a reduction – and it could be up to 100% of the bill.
Any possible reduction depends on where you live, your personal circumstances and a number of other factors – but support is there if you’re entitled to it.
Step 3: Make a simple budget
By taking away your monthly outgoings from your income you’ll work out how much disposable income you have. Now, there are obviously other important things to be factored into a budget – like food costs, transport and so forth – but that’s normal.
Putting a quick budget like this together shows your local council that you’re committed to working out how much you can pay – and also means you won’t over commit and leave yourself short when it comes to paying other essentials.
Step 4: Prioritise paying council tax
Since you’ve created a budget to calculate how much you can afford to pay off your debt and any council tax payments that are due moving forward, you should ensure that these payments leave your account ahead of anything less important.
Although they might not be things you want to cut back on, council tax should be paid before you pay for things like:
- Subscriptions to TV channels and internet services
- Payments toward unsecured loans and credit cards (you may be able to freeze the interest on these if you call and explain you have other more important debts to clear)
- Store cards and hire purchase agreements
- Loans from friends and family
Of course, all debts are important and should be handled – but when the implication of not paying council tax can be severe, it really needs to be near the top of your list.
If you need more information about the options available to you in dealing with your debt, you can always speak confidentially with one of our friendly advisors on 0808 2085 198.