If you’re struggling to pay your bills, chances are Council Tax is a major drain. So if you can’t pay your Council Tax, what are your options?
When people speak about debt, they often talk about things like rent, credit card bills and catalogue payments. You don’t hear them speak about Council Tax debt very often. And yet, it’s a major problem. In the past six years alone, Council Tax debt has soared by 40%. Bills have risen again this year and as unemployment grows and life becomes even more uncertain in the wake of Covid-19, the problems are only likely to get worse. In fact, Citizens Advice Scotland now sees Council Tax debt as the biggest debt issue of all.
So if you are faced with growing Council Tax debts, what should you do?
Do I have to pay Council Tax?
Yes. You have to pay Council Tax if you are over 18 and rent or own a home. You can receive discounts or exemptions in certain circumstances. Council Tax is calculated based on two adults sharing a home, so if you are the only adult in your property you should receive a discount. You may also receive a discount or exemption if you are:
- Receiving some benefits
- Above pension age
- On certain types of apprenticeship
- A student nurse; or
- In some other form of full time education
Council Tax is classed as a ‘priority debt’. Like other priority debts (e.g. court fines, child maintenance, tax, gas and electricity bills, mortgage or rent) the consequences of not keeping up to date with payments can be severe. So if you have enough money to pay some of your bills but not all of them, always choose priority debts over non-priority debts such as overdrafts, store cards, personal loans and money you’ve borrowed from friends or family.
I think my Council Tax banding is wrong. Can I refuse to pay?
No. You can certainly ask for your property to be reassessed if your banding has recently changed or if you moved into your new home less than six months ago. According to Martin Lewis, around 40,000 homes are in the wrong band.
If you do challenge your banding, you could find your home is placed in a lower band which will make you eligible not just for a reduction in this year’s Council Tax, but a refund of overpayments since you moved in or since your home was last reassessed. Bear in mind, however, that it’s also possible that your home could be reassessed upwards, meaning you have more to pay.
To find out more on whether challenging your band is possible – and whether it’s a good idea – check the Money Saving Expert site.
Whether you decide to challenge your banding or hot, however, you shouldn’t stop paying your Council Tax.
What happens if I miss a Council Tax payment?
There is a little ‘wiggle room’ in the system to enable you to catch up with a missed payment of just a few days. Catch up quickly and you’re unlikely to face any penalties. You may not even receive a letter about it.
Once 14 days have passed, however, you will receive a letter asking you to make payment. You will then have seven days to pay. If you can, it’s important that you bring things up to date at this point, because it’s after this that things start to become more difficult.
Bear in mind that, if you do pay at this point, the late payment may have a temporary effect on your credit rating.
I can’t afford to pay my Council Tax. What happens next?
Few people realise that Council Tax is only paid in instalments at the discretion of the council. So when you miss a payment and fail to respond to their letter, the first thing that is likely to happen is you will lose your ability to pay in instalments. Instead, you will receive a ‘final notice’ giving you seven more days to pay the entire Council Tax bill.
Assuming you can’t (and if you can’t make one payment, chances are you’ll be unable to pay the full amount) your case will proceed to the next stage.
I can’t pay afford to pay my Council Tax. What can I do?
The simple rule of thumb is that you should do something. Don’t wait for the letters to arrive. Don’t wait for the debts to mount. The earlier you take action the easier it will be to resolve the situation. And if your attempts to find a solution aren’t successful, you’ll be in no worse a situation.
If you know you can’t afford to pay your Council Tax, don’t wait for the final demand. Take the following steps instead:
- Talk to your local council. There are lots of exemptions and reductions and it’s possible you’re entitled to one that you weren’t aware of
- Ask your council for help. During the worst of the Covid-19 outbreak many councils were able to offer some degree of support. Many may still be able to offer a payment plan or payment holiday if you call them
- Explore your debt management options – see below
Council Tax arrears in Scotland – what happens next?
If you haven’t paid the final notice or reached some other arrangement with the council, they will pass your case to the sheriff court. The court will issue a letter demanding payment within 14 days. You will find that the requested amount has increased from the last demand – this is because the court will add a 10% admin fee.
The letter will include a ‘time to pay’ form and you should take this opportunity to reach an agreement with the court about paying an amount back each week or month. If you can pay any amount – no matter how small – use this form to make the court an offer. Don’t assume that, because you can only afford to pay a very small amount, your offer won’t be accepted. It might, so it’s certainly worth making the offer, which the court will refer back to the council.
- If the council accepts the offer, all action will cease (as long as you keep meeting the agreed payments)
- If they don’t accept your offer (or if you didn’t respond to the court’s letter) the court will make an ‘arrestment’. This means they can deduct money directly from your earnings or benefits.
- If those options aren’t viable, the court can order goods equal to the value of the debt to be taken from your home by sheriff officers (bailiffs). It’s important to note that the value of the debt will increase again at this point as sheriff officer fees will be added to it.
- Where your total debts are greater than £3,000, the court could make an order of sequestration (bankruptcy).
Can I be sent to prison for not paying my Council Tax?
No, not in Scotland. Even in England, where imprisonment is still a possibility, it is rare. In the past six years just 305 people have been imprisoned for non-payment of Council Tax.
Do bailiffs have to tell me when they’re coming?
Not usually, no. However, sheriff officers (the equivalents of bailiffs in Scotland) can’t take anything from your home without a court order allowing them to do so, and you will already be aware that the court made this order. So whilst you may not know exactly when the bailiffs will arrive on your doorstep, you will know that they will be paying you a visit soon.
Can bailiffs enter my home?
There’s a commonly held belief that bailiffs are like vampires: they can only enter your property if you invite them in. In Scotland, however, that’s not true. With the right court order (known as an exceptional attachment order) sheriff officers can enter your home to recover goods and, if you refuse, they can use reasonable force to gain entry.
There are exceptions to this. Sheriff officers will not be able to enter your home, even with an exceptional attachment order, if no one in the house:
- Is 16 or older
- Understands English; or
- Understands the situation (because, for example, of mental disability)
In these circumstances, the officers will need to return at another time.
Even if they can’t gain access to your home, if there’s an unlocked shed or outhouse containing items of value, those could be taken.
What can bailiffs take?
Sheriff officers can take any luxury or non-essential items. These could include:
- Electronics and tech
- Music collections
- Musical instruments
- Tools and garden equipment
There is, however, a long list of things sheriff officers can’t take:
- They can’t take items essential for work so, for example, if you work from home and need a laptop or desktop PC, those items are off limits. If you are a tradesperson, your tools of the trade will not be confiscated
- They can’t take children’s possessions. so an Xbox in a child’s bedroom would not be taken, although a games console in the living room could be taken unless you can prove it is solely used by your child
- They can’t take items essential to everyday life – the cooker, the fridge, the washing machine; and
- They can’t take items that are not yours – although the officers may require proof that the guitar in your living room belongs to someone else, otherwise they may still take it
By the time sheriff officers arrive, you will already have been through weeks – if not months – of stress, worry and mounting debts.
But you can stop the letters – and the interest payments and fees – by seeking debt advice. And the earlier you do it, the easier things will be.
Can I use a Scottish trust deed for Council Tax debt?
Yes. Protected trust deeds are similar to IVAs in England. They are suitable for all types of unsecured debt providing the arears total £5,000 or more, which means they can be used to clear far more than just Council Tax arrears.
Once granted, your creditors can no longer chase you for payment and all interest and penalty payments are frozen, so the debt cannot continue to increase and the stress should start to reduce. Providing you continue to meet your single, affordable monthly payment, your remaining debts covered by the trust deed will be written off once the trust deed comes to an end – usually after four years. On average a trust deed can reduce your monthly payments by 60%.
Will my council agree to a trust deed or an IVA?
The council is like every other creditor. They don’t have to agree to your trust deed but they know that if they don’t there’s a risk they’ll receive nothing. So provided half of your creditors (in number) or two thirds of them (in terms of debt value) agree, the trust deed or IVA will become live, meaning that even those creditors who didn’t agree to it will be bound by its terms.
How do I arrange a trust deed or IVA?
You’ll need to talk to a licensed insolvency practitioner like Debt.org.uk. Our advisors will talk to you about your Council Tax (and other) debt to establish whether a Scottish Trust Deed is the best debt management solution for you.
What other debt options do I have?
To find out which option would be right for you, talk to us now on 0800 193 1024 or apply online.