Harsh collection methods adding half a billion in fees to people’s council tax debt, Citizens Advice reveals Image: Adobe Stock

Residents urged to contact their council ASAP if they have difficulties in paying the tax

Citizens Advice says that outdated and punitive council tax regulations are encouraging local authorities to collect arrears aggressively, causing people serious financial harm.

Its new research shows missing an average council tax payment of £167 in the first month of the financial year, can escalate to a debt of over £2,065 in just 9 weeks.

When someone falls behind on their council tax bill they become liable for the rest of their annual bill after only 2 weeks. Two types of fees are then added on top of the original tax debt: court costs (typically £84) and bailiff fees (commonly £310).

Gillian Guy, Chief Executive of Citizens Advice Image: Citizens Advice

Gillian Guy, chief executive of Citizens Advice, said:

“By forcing local authorities to use rigid and outdated collection processes, council tax regulations make it harder for people to pay their original debts instead of helping them to get their finances back on track.

“Through its council tax collection review, the government must fundamentally reform the regulations governing how local authorities collect debts.

“Punitive processes such as charging a full year’s bill after a single monthly payment is missed show how broken the system is – they both tie the hands of councils and force people into debt.”

Estimated £300m in bailiff fees

Citizens Advice estimates over £560 million in fees were added to people’s council tax debt in 2016/17 alone. This includes £300 million of bailiff fees. Citizens Advice finds this particularly concerning as some of these fees have to be paid by the person in debt before any council tax arrears can be recovered by the local authority.

Ministry of Housing, Communities and Local Government (MHCLG) data shows in 2018, there was over £3 billion of outstanding council tax debt (excluding fees).

An estimated 2.2 million households were behind with their council tax in 2017/18 out of 24.2 million that are liable to pay council tax. This is nearly 10% of all households.

Further analysis from the charity shows between 2010 and 2018, the amount of council tax debt grew by 30%. Council tax arrears have risen more than 6% in the last year alone.

In September, the National Audit Office said there was evidence that aggressive enforcement action is ineffective, and can be harmful in situations when someone is struggling to pay their debt.

Collections methods to be reviewed

The government announced this month that it will review the way local authorities collect council tax. Through this, Citizens Advice wants changes made to the legislation governing this that:

  • Stops people being asked to pay their entire annual bill if they miss 1 monthly payment
  • Adds statutory guidance stating that councils must attempt to develop an affordable repayment plan for the arrears before taking the debt through the courts
  • Lets councils collect debts without having to use processes – such as a court order – which incurs fees for the person in debt
  • Removes the threat of imprisonment for council tax arrears in England.

Citizens Advice wants to see these changes made alongside the creation of an independent bailiff regulator. The Ministry of Justice is consulting on this and will report back by the summer recess.

Citizens Advice new research shows missing an average council tax payment of £167, in the first month of the financial year, can escalate to a debt of over £2,065 in just 9 weeks Image: Citizen Advice

Central Bedfordshire Council council tax advice

Residents encountering difficulties in paying council tax in Central Bedfordshire (CBC) can find advice on the council’s website.

The council may be able to reschedule the instalments, and residents maybe be entitled to Council Tax Support. CBC advisors have various other methods to assist those who are struggling to pay their Council Tax. This includes a fast track referral to Citizen’s Advice money advisors team for free independent help.

A CBC spokesperson said:

“We do urge residents to contact us straight away if they are experiencing difficulties in paying their council tax, so that we can put measures in place to help them.”

Bedford Borough Council was approached for a comment.