If you’ve ever worried about falling behind on your council tax, you’re not alone. Around 4.4 million people in the UK are currently in council tax debt, according to campaigners Debt Justice.
The Government has just announced new rules to make the system fairer for people in England who have fallen behind with payments.
What was wrong with the old system?
Council tax is a significant cost. Even if you’re in the lowest band, and if you are eligible for some reductions, it can be a major headache for families and households, especially those with low incomes.
Currently, missing just one payment can leave you being forced to pay the full remaining council tax for the year, just two weeks later. Soon after that, councils could add extra ‘admin fees’ to your bill, take people to court, and send bailiffs to your door.
In reality, councils would normally give people a bit more time. But money expert Martin Lewis has described the system as “vicious and damaging”, and the way this debt is collected adds serious financial stress to family budgets.
What’s changing?
The government has confirmed several changes, which it says will begin to come into force in England from April 2027. They include:
- 12 payments, not 10. Councils will now spread the cost of council tax over 12 months, instead of 10 months as is currently the case. This means you’ll pay a little bit less each month - but you can still choose to pay over 10 months, if you want.
- More time before enforcement. Councils will now have to wait at least 63 days before they are allowed to charge your full annual bill, and will have to support families in a sustainable repayment plan.
- Recovery cost cap. The fee that councils can charge as part of council tax debt recovery is now a maximum of £100.
- SMI discount change. The Government says it will also update the name and definition of the ‘Severely Mentally Impaired (SMI) council tax discount’. It offers at least 25% off a household’s Council Tax Bill. but it’s under-claimed and many are put off by the stigma attached to the current name.
…and what’s not changing?
The first thing to remember is that these reforms are not immediate - they’ll take place from April 2027.
It’s also important to know that they are only for England - they do not change the way council tax debt in Scotland, Wales and Northern Ireland is collected.
It’s worth being clear: councils can still use bailiffs, and take people to court.
The rule changes slow down the process for unpaid council tax and require more support to be offered first, but it’s still important to keep up with your council tax payments.
Another thing that hasn’t changed is that wherever you are in the UK, there are several council tax discounts and reductions. These include people living alone, full-time students, carers, and people with disabilities. Use the benefits calculator on our website to check if you’re eligible for a discount - and you might find other benefits income you’re entitled to claim.
What can you do if you’re struggling with council tax debt?
If you’re worried about council tax debt, the sooner you reach out - to your council or a debt advice service - the more options you’re likely to have.
If you’re already behind on your council tax, or think you might struggle with an upcoming payment, contact the council. Don’t wait for them to come to you.
You might be able to apply for something called ‘Breathing Space’. This is an official Government scheme giving you protection from those you are in debt to, for 60 days or more. Unpaid council tax is one form of debt covered by the scheme. You can apply for Breathing Space through StepChange Debt Charity, and other charities.
You can also get confidential debt advice (and potentially apply for Breathing Space) from other charities. Check out our Debt & Money Matters page for other resources, links and places to get support.
I'm in debt - can Fair for You still help me?
Fair for You is an ethical lender. Our loans help people buy essential items when we see they can afford to repay. We don’t provide debt advice, but we often suggest places that you can go if you need help with your finances.
We do believe that when you’re trying to stay on top of your finances, it’s important to know what options you have if, for example, an essential appliance breaks down and needs to be replaced. An affordable loan from Fair for You can help a customer avoid taking out an unaffordable loan elsewhere, or turning to a risky, illegal lender.
Our latest independent impact report shows that after using Fair for You, our customers were much less likely to say they had a “heavy” debt burden. Repaying a Fair for You loan on time can help improve your credit score, meaning you have more options for managing your finances in future.
If council tax debt means you are struggling to repay your Fair for You loan, please look at our help and support page.
Fair for You loans are subject to eligibility and affordability checks. Missed payments may affect your credit file. Only borrow what you can afford to repay.