Council tax warning as millions taken to court after missed bill

There has been a rise in local authorities taking legal action against people who haven’t paid their council tax bills.

Some £5.5billion is owed to local councils in England, new figures from Money Advice Trust show.

The charity argues that urgent reform of council tax collection is needed to protect struggling households.

The current rules mean that households can be liable for their full annual bill after one missed payment, which the charity says risks pushing struggling households into further financial difficulty.

Additionally, over the past two years, magistrates’ courts across England have handed out the equivalent of more than 4,500 debt orders a day, inews reports.

More than three million people have been taken to court for council tax debt in some of the poorest parts of the country, figures obtained via Freedom of Information show.

Analysis of the FOI figures shows that outside London, areas in the North and Midlands, areas of high levels of deprivation are disproportionately affected compared to more affluent areas in the South.

Hyndburn is one of the poorest areas in Lancashire and has seen more than 27,000 liability orders granted, which is equivalent to more than a third of the 82,000 people that live there.

Morgan Wild, head of policy at Citizens Advice, said: “The cost of living crisis is still here.

“The growing number of people who simply don’t have enough to make it to the end of the month and are then falling into debt is a huge concern.

“Missing just one council tax payment can have dire consequences. People who fall behind can quickly find themselves facing demands for a whole year’s worth of payments, extra charges and bailiffs at their door.

“People on low incomes should be able to rely on the system designed to support them with council tax, but a postcode lottery and reduced funding mean that many aren’t getting enough or any help at all.”

With the sustained impact of the cost of living crisis continuing to be felt by millions of households, the Money Advice Trust is urging the Government to bring in measures to reform the way local authorities collect council tax debt – a move the charity says will protect struggling households from escalating collection activity and benefit councils.

To improve current council tax collection rules for households and councils, the Money Advice Trust is urging the Government to:

Improve support through increased and ringfenced funding for local Council Tax Support schemes to prevent arrears from occurring in the first place.

Reform existing collection rules (The 1992 Council Tax (Administration and Enforcement) Regulations) including:

• stopping people from becoming liable for their full annual bill if they fall behind on instalments.
• introducing a pre-action protocol so councils have to offer genuinely affordable repayment plans before progressing to other collection methods.

Joanna Elson CBE, chief executive of the Money Advice Trust, said: “Current council tax collection rules are not working for struggling households or for local authorities reliant on council tax income to run their vital services.

“These outdated rules, which can leave people liable for a whole year’s bill after just one or two missed payments, are not an affordable or efficient way to collect council tax debts and are completely out of step with the challenges many households are facing.

“Reform is needed to ensure people having difficulty paying their council tax are not confronted with unfair and unsustainable collection practices that risk pushing them into further difficulty. I would encourage anyone worried about their finances to contact a free debt advice charity like National Debtline.”

A spokesperson for the Government said councils need to be “sympathetic to those in genuine hardship and always be proportionate in how they collect outstanding council tax”.