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Council Tax Debt Help - Where Do I Start?

Last reviewed: November 2023

What's it all about?

This article's designed to help you:

Understand why Council Tax debts need to be cleared fast.
Learn whether you’re owed a Council Tax rebate or other help.
Get assistance if you’re struggling to pay your Council Tax bill.

The basic rule with any kind of debt is that it’s usually better to pay down what you owe than to save up money. Basically, your debts will almost always mount up faster than the interest on any cash you’re putting aside. Over time, you’re stacking up debt instead of savings

Once you understand that principle, the next step is to weigh up which debts you ought to bring down first. It’s easy to assume that the most expensive ones should go at the top of the list – but that can sometimes be a bit of a trap. Certain debts come with extra strings attached, even if they’re ‘cheaper’ than others. Even relatively small debts can sometimes land you in legal trouble fast.

Council Tax debts, for example, might not seem like a priority compared to high-interest loans or expensive credit cards. However, given that councils in England can hike Council Tax rates up by 5% per year without a local vote, they can get you into serious trouble if you don’t take care of them quickly. Worse still, a lot of Council Tax problems could be completely unnecessary, since there’s a real chance you might actually be owed a tax rebate for Council Tax.

Why Council Tax debts need to be cleared quickly

The big thing to realise about Council Tax is that it’s a high-priority debt to clear – arguably more than even those credit card balances or unsecured loans we mentioned. Your local council has a lot of ways to make your life difficult if you don’t pay up what you owe.

Here’s an example: if you wind up ‘in arrears’ on your Council Tax bills, meaning you’ve fallen behind on the payments, you could find yourself with a ‘liability order’ from a magistrates court. This nasty little piece of paperwork can dump some painful court costs on top of what you already owe, and pave the way for even more enforcement action. We’re talking about visits from bailiffs, automatic deductions from your earnings or benefits, bankruptcy or even a prison sentence if you let things go that far.

Are you owed a tax rebate for Council Tax?

Council Tax charges are set in ‘bands’ from A-H, with the band you’re in based on how much your property was worth back on the 1st of April 1991 (for England and Scotland) or the 1st of April 2003 (for Wales).

It’s quite possible to be put into the wrong Council Tax band, and if you think you have you can actually challenge the council’s decision. This kind of thing can happen if, for instance, your property’s been changed, demolished or is being used for different purposes than before. If you think that applies to you, you can challenge the decision via the Valuation Office Agency (or the Scottish Assessors website in Scotland).

Council Tax Rebate

Tax rebate: Council Tax discount

Another reason your Council Tax bills might be too high is if you’re due a tax rebate called a Council Tax discount. For instance:

For people living alone, you can get a 25% discount. When this is worked out, the rules basically ignore anyone living with you who’s under 18, along with any 18-19-year-olds who are still in education on the 30th of April. The same goes for anyone you’re still entitled to claim Child Benefit for.
People in training, who are temporarily away or who suffer from severe mental impairment can sometimes also be ignored when working out how many adults live in a property. That’s why it’s so important to make sure the council has a clear picture of your circumstances. If they don’t have all the information they need to calculate your Council Tax bill, you could easily end up overpaying.
Even if you’re living with someone who isn’t ignored because of the ‘living alone’ rules, if they’re on a low income or getting benefits you might qualify for a ‘second adult’ Council Tax rebate.
Holiday homes, second homes and properties that aren’t being used can all sometimes qualify for Council Tax reductions. Check your local council’s website to see what their rules are.
If your property has an extra kitchen, bathroom or other features put in to meet the needs of a disabled person, you might get a reduction to your Council Tax rate. You’ll usually be expected to provide some evidence to the council to claim this, obviously.

To put it in perspective, let’s say you’re a student who’s just moved into rented accommodation. The rules say you don’t need to pay Council Tax – but that doesn’t mean the local council won’t ask for it. You’ll almost certainly have to apply for your Council Tax exemption directly. It might sound like a hassle, but at a saving of up to £120 per month, it’s absolutely worth it!

Tax rebate: Council Tax reduction

Another thing that can bring down the Council Tax you’re being charged is if you qualify for a tax rebate called the Council Tax Reduction (also known as Council Tax Support). Again, though, the council will need a lot of information about your circumstances to make their overall calculations.

You could qualify for a tax rebate under the Council Tax Reduction rules if:

You’re the person who’s actually paying the Council Tax bill.
You’re on a low income from either work or benefits.
Your partner (if any) and you have no more than £16,000 in savings and capital.
You’re on Universal Credit.

The reduction you actually get will depend on a range of conditions, from your age to your savings and benefits. You get less if you’re still at working age, for example.

Council Tax debt help: what to do if you find yourself in arrears

Okay, let’s say you’ve missed a few Council Tax payments and can’t see an easy way to pay up. Don’t fool yourself into thinking that the authorities won’t notice. More specifically, don’t wait for them to get in touch with you before deciding to do something about it. Hop straight on the phone to the council office and talk them through the difficulties you’re having.

Unless you qualify for a Council Tax rebate, you’ll still end up having to pay in full, but there’s a good chance they’ll be able to offer you easier ways to do it. If you ignore the problem, you’re probably going to find yourself facing court costs, bailiff bills and potentially lots more trouble on top.

Getting a Council Tax payment plan set up

If you talk to your council, you’ll probably find them more than willing to help. After all, they’re not trying to ruin you. All they want is what you owe by law. Instead of coughing up the whole amount at once, though, the odds are you’ll be able to spread your payments out over a longer period, paying off your debt in small chunks each month. No, it still probably won’t be much fun, but it’ll eventually make the whole problem disappear and it’s a lot better than the alternatives.

Keep checking back here for more money tips and updates. We’re experts at saving you cash and we’re always here to help. That’s the reason why you’re better off with RIFT.

What’s it all mean?

Council Tax Discount: A rebate on your Council Tax bill based largely on your personal circumstances and who’s living with you.
Council Tax Reduction: A lower Council Tax rate based on your household income and savings.

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