Following on from our blog earlier this week, today’s messages focus on what you need to know to help you deal with Council Tax (CT) arrears.
Households accumulate CT arrears for several reasons; not solely because they have sufficient income to cover their CT liability. Below are three of those additional reasons:
- Those liable for CT don’t realise that they are entitled to a discount or an exemption, even a write-off, so are paying a much higher liability than they should be;
- Those liable for CT do not notify their local authority of a material change to their circumstances – such as an increase in their income – leading to an overpayment of Council Tax Support (CTS) which needs to be paid back; and,
- An interruption in someone’s means-tested benefit claim – particularly Universal Credit – can lead to an automatic (though often erroneous) suspension or termination of their CTS claim which the claimant isn’t aware of until it’s too late.
In all these scenarios measures can be taken to either prevent these issues arising or, retrospectively, to minimise the damage done. Ask your local independent advice service for guidance on this or go to https://www.moneyhelper.org.uk/en/money-troubles/dealing-with-debt/help-if-youre-struggling-to-pay-council-tax for more information on related issues.
To understand how to deal effectively with (potential) CT arrears caused by non-payment it is important to, briefly, understand the CT ‘debt recovery process’. This journey, for a liable householder, runs as follows:
- CT bills are received in February or March with full payment required before April.
- If full payment is not received in time, or a monthly repayment plan is not agreed, the householder becomes liable for the full payment as a debt.
- One or two reminders are sent to the householder; the number and tone varying between local authorities.
- If repayment is still not made the local authority will go to court to seek a Liability Order (LO) legally clarifying the amount owed and who owes it.
- If payment is not made immediately the local authority can then avail itself of a range of enforcement options, namely:
- Referring the case to commissioned Enforcement Agents (‘bailiffs’) who can visit properties, take possession of goods and sell them to recover the debt .
- Move to agree with the DWP a direct deduction from your welfare benefits.
- Arrange an ‘attachment to earnings’ to take repayments directly from your wages.
- Put a Charging Order on your property, if you own it, in order to recover the debt should the property be sold.
- Instigate bankruptcy proceedings to recover the debt, or,
- In exceptional circumstances, where the local authority believes it can prove to a court that you have willfully refused to pay even though you have the means to pay, the local authority can ask that you be committed to prison for non-payment.
For more details on all of these options go to https://www.citizensadvice.org.uk/debt-and-money/help-with-debt/dealing-with-urgent-debts/dealing-with-council-tax-arrears/ .
At every stage, once a debt has accrued – especially after a Liability Order has been obtained – it is in the householder’s interests to contact the local authority directly as soon as possible to discuss and agree a repayment plan.
Local authorities are obliged to ensure repayment plans are affordable, so be ready with an up-to-date statement of your income and expenditure.
Local authorities (and bailiffs) will also be sensitive to debtors “with vulnerabilities”, so make sure they know about any vulnerabilities in the household which might make payment more difficult or amplify the impact of debt recovery.
To help ease repayments conventional repayment periods of 10 months can be extended to 12 at the local authority’s discretion.
Finally, in exceptional circumstances, where the householder has no realistic ability to repay their debts and trying to repay them would cause severe financial hardship, the local authority can use its discretion to write-off all or part of the liability under what is known as a ‘section 13a decision’.
If you are faced with CT arrears for any of the reasons referenced above, but feel unable to resolve the issues satisfactorily by yourself, you must seek independent expert advice from organisations providing free, impartial and confidential accredited debt advice such as Citizens Advice, National Debtline or Stepchange.
Don’t let fear of debt stop you from taking control of your finances.
Editor’s Note
The guidance provided above is accurate at the time of writing but is not exhaustive. Please seek expert advice before taking important steps in your debt management journey.
