The Analysis Comment


Tax ‘crisis’ as consumers worry about affording bills


Report finds over seven million people in Britain (14%) are worried they will not be able to afford their Council Tax bills over the next year


The coronavirus pandemic has had a significant impact on council tax arrears (with latest figures showing over £4.4bn is owed in England): but it does not tell the whole story. Even pre-covid, council tax arrears were growing at a worrying level. In recent years, advice services like


National Debtline and Business Debtline have been seeing an increasing number of people struggling with their council tax, often facing unaffordable bills or being on the end of harsh collection practices which can make their financial situation worse. It is clear that the current collection rules,


and system of Council Tax Support in England, are not working well for individuals on low incomes. However, there are also real questions about whether they are working well for local authorities either. Local authorities rely on council tax to fund


vital local services. However, reductions in funding for local Council Tax Support schemes mean many local


authorities in England are increasingly having to charge low-income households with bills which are simply unaffordable. As we explore in our report, growing


evidence links the significant increase in council


tax arrears to the changes


implemented to local Council Tax Support in England. The challenges do not end there. Councils


have a duty to try and collect as much council tax as possible. However, outdated collection rules for England and Wales push councils towards using harsher collection practices and means that council tax debt can escalate rapidly – making it even harder for people to get back on track. When councils pursue arrears from people


receiving partial Council Tax Support, these are often small amounts relative to total council tax bills but can attract higher collection costs – raising questions about how efficient this is for local authorities.


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In recent years, advice services like National Debtline and Business Debtline have been seeing an increasing number of people struggling with their council tax, often facing unaffordable bills or being on the end of harsh collection practices which can make their financial situation worse


In these respects, it is clear that change is


needed. If we are to turn the tide on growing council tax arrears, effective Council Tax Support has to be part of the solution. Reform should build on the positive impact of the Covid Hardship Fund in England – which enabled local authorities to reduce the bills of Council Tax Support recipients by a further £150 – and the welcome flexibility in collection that many councils have shown during the pandemic. As we set out here, there is strong public


support for these changes too: a recognition that, while councils must always ensure those who can pay do so, so too must we ensure that the system is fair to people on low incomes and that council tax bills and collection processes do not push people into financial hardship. In doing so, we can make sure the system is better for households and local authorities alike.


Recommendations l The Government should continue its increased funding for local Council Tax Support beyond Covid-19, so that all councils can continue to offer 100% support schemes in the wake of the pandemic. l The Government should amend the Universal Credit application process so it automatically triggers an application to the applicant’s local authority for local Council Tax Support. l The Ministry of Housing, Communities and Local Government should amend the 1992 Council Tax (Administration and Enforcement) Regulations to prevent the rapid escalation of debt and ensure people are treated fairly. l All local authorities should exempt Council Tax Support recipients from bailiff action. CCR


Edited from the Summary to the report Council Tax After Covid from the Money Advice Trust


August 2021


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