Campaign win! Taking a big step towards ending the Council Tax Trap

Today the government has announced new rules for fairer council tax collection, giving people who have fallen behind on payments more time to get back on track before their debt starts to escalate. 

Changes to council tax debt collection policy might seem obscure and technical. But for people facing  council tax arrears, including approximately two million people with mental health problems, this represents a significant change that will make the system fairer, and mitigate the devastating harm that it can cause to people’s mental and financial health. 

And for us at Money and Mental Health, this is a campaign win that gives us real cause to celebrate!

In 2024, we launched a campaign to end the Council Tax Trap – where people who fall behind on one monthly council tax payment have just two to three weeks to pay their arrears before their council can demand that they pay the whole annual bill. This is on average £1,868. 

If someone can’t pay that bill, they can often face hundreds of pounds in extra charges, a court summons, and even be threatened with imprisonment. That’s despite our research showing that 91% of people behind on council tax bills could not afford an unexpected expense over £1,000, and a third (34%) could not afford an unexpected bill at all.

It just doesn’t make sense that if someone has struggled to pay their monthly payment, they should then be expected to pay the entire year’s worth within a matter of days.

And it unfairly punishes those of us with mental health problems, who are not only twice as likely to fall behind on council tax, but can also struggle with symptoms like low energy or motivation, and difficulties processing complex information, which make it impossible to keep up with the rapid escalation of debt collection action.

We’re delighted that the government has taken action to change this harmful system. Under the new rules announced today, people will not become liable for their full annual bill until 63 days after missing a payment. This significantly increases the time that people have, in law, to get back on track with payments.

On top of this, the government has capped the charges that councils can add onto someone’s bill for a liability order and court summons at £100. With some councils charging more than £155, this will go a small way to helping limit the burden of falling behind on council tax.

This news comes hot on the heels of the Welsh government’s announcement in September last year that they would implement similar changes for councils in Wales, and even implemented a lower cap on charges at £70.

It’s not quite perfect. A lower cap on charges would reduce pressure on people already struggling, and a debt collection timeline closer to three months would better reflect the support typically offered by commercial credit lenders to those in arrears. Our work on this isn’t done: there is much more local councils can do to support residents who are struggling to keep up with their council tax.

But today’s announcement marks a huge step forward that will positively impact the lives of millions struggling with their money and mental health.

It also represents the culmination of years of hard work alongside our colleagues across the debt advice and charity sector and, most importantly, with our Research Community.

We couldn’t have done this without the hundreds of Research Community members who bravely and generously shared their experiences of falling behind on council tax and being caught in a cycle of rapidly escalating debt collection. Your support has been vital to our work, helping us prevent others from facing the same situation in the future.