Currently, council tax is automatically set up to be paid in 10 monthly instalments from 1 April to 1 January – with no payments made in February and March. However, billpayers can ask to pay over 12 monthly instalments instead.
But, under proposals published today, the Government has suggested that 12 monthly payments become the default. Ministers said the change will assist households in managing their finances – although households will still be able to choose to pay over 10 months.
The proposal is one of several up for debate in a council tax consultation published by the Government today (20 June). The consultation sets out how the Government intends to modernise the administration of council tax “to deliver a fairer and more efficient system for taxpayers and local Government.”
Council tax debt
The consultation also looks at the way council tax debt is recovered. Currently, if a household misses a single payment, the local authority can demand the bill is paid immediately for the entire year – and use bailiffs to enforce this.
Last year, debt charity StepChange described the way council tax arrears are dealt with as “aggressive” and “counterproductive” – and called for the system to be overhauled.
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The Government is proposing increasing the time before councils can request a full bill from households and capping the costs charged on households in seeking liability orders for debts.
The Government also proposes changing the outdated and alienating name of the “severe mental impairment” disregard, and amending its definition to encourage more eligible people to make use of the disregard.
Challenging bandings
The Government is also seeking views on whether there is anything it can do to remove barriers to effectively challenging bandings. It said it recognised that some households could be paying more than they should and that there is not a straightforward mechanism to check and challenge a property’s band.
Earlier this year, the Resolution Foundation described the council tax system as having a “bizarre, outdated design” meaning some low-income households are forced to pay almost as much council tax as income tax.
Calls for increased support
Grace Brownfield, head of influencing and communications at Money Advice Trust, said: “Rules on how missed council tax payments are collected are hugely outdated, having not been reformed since 1993. Since then, we’ve seen a significant rise in the number of people struggling to pay their council tax bills.
“Currently, people in financial difficulty can be asked to pay their full annual bill after just two missed payments and can quickly see their debts passed to bailiffs. This isn’t fair or effective, and only risks pushing people further into hardship.
“We’ve long campaigned for improvements to how people are treated when they fall behind on their council tax, which would benefit councils too. We’re pleased the Government has recognised this and is looking at making changes. Extending the time period before councils can make people liable for their entire annual bill, as well as introducing new steps councils have to take to understand someone’s situation and support them accordingly, could make a big difference in reducing the harm council tax debt can cause.
“As welcome as these measures would be, if the Government is serious about tackling council tax debt, they will also need to invest in increased council tax support – to help stop people falling behind in the first place.”
