‘Vicious and damaging’: Council tax overhaul set to end decades of financial ruin fears
Brits will be granted more time to settle outstanding council tax bills under fresh reforms, ending decades of “vicious” collections which have left many on the brink of financial ruin.
The shake up to the administration of bills sparks the first changes since 1993, after the lack of updating to fit modern needs and shifting economic environments left Brits facing “unnecessary stress and anxiety”.
Under the current system, missing one monthly payment can leave people on the brink of “financial ruin” as they become liable to pay the entire outstanding sum in a single payment just two weeks later.
But in many cases, people find themselves still unable to pay as they are forced to prioritise paying essential bills, such as heating or electricity, or are still awaiting paychecks or other payments.
System change
From 2027 the archaic system will end, with households being granted 63 days, roughly two months, to settle their bill.
Councils will have a requirement to work with constituents to place them on a sustainable repayment plan before triggering the process of a person losing the right to pay in instalments and enforcement action.
The government plans to publish non-statutory guidance on the steps once they are agreed.
Billing for council tax will also be shifted to 12 month payments by default, rather than the current 10 months, while the cost of which councils can charge when recovering overdue bills, known as a liability order, will be capped to £100.
Typically, councils charge between £70 and £150, but some have pushed these figures higher in the past as there is no strict statutory maximum, only that it must be “reasonably incurred”, a definition which has been stretched at times.
Local government secretary, Steve Reed, said: “Too many families are facing aggressive enforcement action, with people left terrified of bailiffs knocking on the door because one month’s council tax bill was missed.”
Minister for local government, Alison McGovern, acknowledged that the “way council tax is run is outdated and confusing” and the changes “will cut through complexity” and ensure the “system is fit for the 21st century”.
Banks would blush
The move has been welcomed by campaigners, including Martin Lewis, who called council tax debt collections the most “vicious and damaging” form of legal debt collection.
He said: “Council tax debt collection is so aggressive it’d make banks blush. It’s the most vicious and damaging form of legal debt collection out there, causing counterproductive misery for millions.”
“How people who can’t find a month’s money are expected to find a year’s I don’t know. Yet if they can’t pay, within just three more weeks, they are often taken to court, have ‘admin costs’ added, and soon see bailiffs sent in.
“No commercial firm would be allowed to do anything close, constituents are treated worse than customers.”
The government confirmed proportionate action will continue to be taken against those who avoid paying council tax at all.
Bills on the rise
The GMB union urged the government to go further and look “at reforming the council tax system itself, which is outdated, out of touch and unfair”.
The union’s words come as a number of households across the country brace for exceptionally high council tax rises amid the government reforms of local authority funding.
As part of new finance arrangements, which came into effect this month, a number of local authorities have become allowed to raise their council tax rates higher than the usual five per cent maximum.
Windsor and Maidenhead will see council tax rise 7.1 per cent to £1,953, a £129 hike, while Liverpool will suffer a five per cent rise to £2,674.60.