Dealing with council tax debt

At Lowell, we understand that understanding all the different types of debt and their differences can be complicated. That’s why we’ve created this guide going through council tax debt including what it is, what happens if you do or don’t pay, and where to seek advice.

In this guide, we’ll cover:

This content is intended to be an impartial guide regarding council tax debt. Lowell Financial Ltd does not offer financial advice. You can find out more about the organisations you can contact in our guide on debt help and support.

What is council tax debt?

Council tax is a yearly fee that you pay to your council which funds various services such as libraries and rubbish collection. The amount you have to pay will be determined by your local council.

Council tax debt, which can also be referred to as council tax arrears, is when you miss a council tax payment. To be in ‘arrears’ for council tax means that you owe money to your council.

It’s worth noting that in Northern Ireland, taxes are referred to as ‘rates’. Both of these just refer to the same system of local councils collecting money.

Is council tax a priority debt?

Yes, council tax is classed as a priority debt.

Priority debts are those which can cause serious problems if you don’t do anything about them. This means that, if you have a priority debt, you should focus on paying this off before other non-priority debts like credit cards or catalogue debt.

If you have more than one outstanding priority debt, you can speak to independent organisations such as Citizens Advice for expert advice on working out which debts to deal with first.

What happens if you miss a council tax payment?

If you happen to miss a council tax payment, the council will send you a reminder notice around two weeks later. This reminder notice will explain that you have seven days to pay the missed payment.

If you don’t pay the missed payment in full within 7 days (or if it’s the third time you’ve been late with council tax payments within one financial year), you’ll instead be sent a ‘final notice’ explaining that you now owe the full council tax amount for the year and that you have seven days to pay this.

You’ll receive two reminder notices maximum for missed council tax payments each financial year. The financial year, also known as the ‘tax year’, runs from the 1st of April until the 31st of March the following year.

Councils have extra powers when it comes to debt collection. This could involve:

  • Applying for a liability order
  • Sending bailiffs to your property
  • Taking payments from your benefits
  • Using an ‘attachment of earnings’ to take payments straight from your wages

What is a liability order?

If you don’t pay the whole year’s council tax within seven days of the final notice, your council may take legal action to recover the debt. This involves applying for a liability order from the courts.

A liability order is a legal demand for payment. Having a liability order means that your council can collect any unpaid council tax in several ways, such as the following:

  • Taking money directly from your benefits
  • Deducting money from your earnings
  • Sending bailiffs, also known as ‘enforcement agents’, to your property
  • Taking bankruptcy action against you
  • Taking you to court which may lead to being sent to prison for up to three months

Your local council should only look into a liability order as a last resort after exploring all other options. This could include offering you an affordable payment plan or allowing you enough time to apply for a Council Tax Reduction if you’re eligible. We’ll explore these other options further in the next section on ‘help with council tax debt’.

Can bailiffs force entry for council tax debt?

No, bailiffs are not allowed to force entry if they’re collecting council tax debt.

However, your council can still send bailiffs, also known as ‘sheriff officers’ in Scotland, to your property to try and collect council tax debt. You will receive letters in advance letting you know that bailiffs will be sent.

To stop bailiffs visiting your property, you can pay out the debt that you owe or contact your council to sort out an alternative payment plan. You can read our guide dealing with bailiffs for more information on this process.

Can council tax debt be taken from Universal Credit?

In short, yes. Council tax debt can be taken from Universal Credit as well as other benefits including Income-based Jobseeker’s Allowance (JSA), Income-related Employment and Support Allowance (ESA), Income Support, and Pension Credit.

How much can council tax take on attachment of earnings?

As we mentioned, a council may use an attachment of earnings order (AOE) to take payments directly from your wage and pay it towards your council tax debt. This will work in a similar way to national insurance as the money will be taken before you receive the rest of your wage.

When it comes to how much can be taken, this will be a fixed percentage based on your earnings. A court will review your current financial situation and work out how much you should pay.

Help with council tax debt

When it comes to debt, you don’t have to deal with it alone and there are various ways you can get help with council tax debt if you’re struggling.

Speak to your local council

If you’re struggling with your finances and can’t afford your council tax payments, you can speak to your local council and explain your situation.

Each council works differently and will have its own processes in place. Once you reach out to them, they’ll be able to discuss potential options directly with you.

Depending on your circumstances, you might be able to pay off your council tax in smaller amounts through a payment plan.

Alternatively, if you’re on a low income, you may even be able to apply for a reduction, sometimes called council tax support. This means that the amount you owe could be reduced by up to 100%.

There are a number of factors which will affect your eligibility for a council tax reduction. This includes:

  • Where you live
  • Personal circumstances (e.g., your income, number of children, benefits you receive)
  • If other adults or children live with you
  • Your household income which includes savings, pensions, and your partner’s income

You can find out more about applying for a council tax reduction on the official GOV UK website.

Seek expert advice from organisations

We understand that dealing with debt can leave you feeling overwhelmed, and you might be unsure what to do next. However, you don’t need to figure this out on your own.

There are lots of independent organisations out there, such as National Debtline and StepChange, who are ready to offer you free expert advice based on your situation.

Once you reach out, they’ll be able to advise you on possible options, including what to do if you’ve got multiple debts in your name. They’ll also be able to explain the different debt solutions that you may be able to apply for.

Take another look at your finances

If you’re struggling to keep up with your council tax, it might be that your finances are out of control. This is where creating a budget can help as it will highlight exactly where your money is coming from and going. You might even be able to identify areas where you save.

Whether you’re a Lowell customer or not, you can use our budget calculator tool to get a clear overview of your finances. Once you have this information, you’ll be able to figure out a budget that works better for you going forward.

How long can council tax debts be chased?

Council tax debts are an ‘unsecured debt’. This means that they become ‘statute barred’ or ‘prescribed’ after a period of six years. For more information on exactly what this means, you can read our guide on statute barred debts.

Can council tax debt be written off?

In very rare and specific circumstances, council tax debt can be written off by your council. This is known as ‘discretionary relief’.

There are only certain circumstances in which a council will consider writing off your council tax debt. This includes:

  • Your home can’t be lived in due to fire or flood damage
  • You don’t have any money spare after taking typical living costs into account
  • You have serious ill health, this can include mental health conditions

Alternatively, as we touched on, you may be eligible for a debt solution that can include this type of debt. For example, a debt relief order can include council tax debt.

To find out more about the best next steps for you, you can speak to independent organisations such as those mentioned in our previous section on seeking expert advice.  

Can you sell a house if you owe council tax?

If you’re planning on selling a house and owe council tax, this might complicate things. This is because you’re still liable for any council tax payments up until the date when you can prove that you’re no longer the property owner.

Whilst you’re still able to sell a house, this doesn’t write off your council tax debt. You’ll still be responsible for this debt, and your local council can still take steps to recover the outstanding balance even after you’ve sold the home.

Do Lowell buy council tax debt?

No, at Lowell we don’t purchase council tax debt.

However, we do purchase other types of debt including loans, overdrafts, credit cards, and catalogue debt. You can read our guide on debt purchasing for more information on how this all works.

We understand that being contacted by Lowell for the first time can be daunting but we’re here to support you and work together. Once we hear from you, we’ll be able to set up a sustainable payment plan that you can keep up with.

If you’ve got any questions or concerns about your Lowell debt, please get in touch with our friendly team who can help you find the best way forward. Alternatively, you can manage your own Lowell account through our very own mobile app.

You can find more helpful guides on debt-related topics like this, as well as information on how we work here at Lowell, over on our Debt Guidance Hub.

First published: 28th March, 2024