Council Tax Debt is a priority debt which needs to be cleared at the earliest possible. It is not an ideal situation in which local authorities chase debtors for clearance of their council tax dues or have to rely on magistrates to raise court summons for a Liability Order to recover the unpaid amount.

How Long Can Council Tax Debts Be Chased?

Strictly speaking, a council tax debtor may be chased for up to six years to clear their council tax dues. After this time duration has passed, the debt (or the remaining amount of it) is written off by local authorities or becomes statute-barred.

However, it must be remembered that during these six years, the local council would have left no stone unturned in making attempts to recover the amount. From sending a payment reminder to sending a bailiff to the house of the debtors to requesting the court for sentencing the debtors to a jail term, they would have used all possible methods to recover their debt.

Through this article, we aim to learn more about council tax arrears and how to rectify a situation when someone is in council tax debt. For this purpose we will explore the following areas:

  • Why Is Council Tax To Be Paid?
  • What Are Council Tax Arrears?
  • What Happens If Someone Does Not Pay Council Tax?
  • Can Council Tax Debt Be Written Off?
  • What Is An IVA?
  • Who Is Exempt From Council Tax Payments?

Why Is Council Tax To Be Paid?

Council tax is a property-based, mandatory tax payable to local councils by residents (whether owner or renter) in England, Scotland and Wales. It is the major source of revenue for local authorities which aids them in providing services to residents such as:

  • fire fighting and police
  • parks and leisure
  • schools and community halls
  • roads and street lights
  • garbage collection and recycling

What Are Council Tax Arrears?

If someone does not pay their council tax bills on time, this means that they are in “arrears” or that they owe money to council authorities. If you anticipate that you will not be able to make council tax payments on time or at all, you should contact your local council office and inform them. 

If you qualify for a council tax reduction, you will be asked to apply for it. Otherwise, councils may also offer a one-time discount to make payment adjustments. Local councils may be contacted through this link Find your local council

However, if an individual chooses to pay their council tax, they will soon be in council tax debt for which councils will start with sending reminders but if they are unable to recover the amount due on debtors, they may demand a full year’s payment in lump sum amount or even take the debtor to court to clear their dues. 

To learn more about getting help with council tax payments click on the given link Council tax

What Happens If Someone Does Not Pay Council Tax?

If someone does not pay their council tax bill, the council sends them a reminder to clear their dues in the next 7 days. It is best to contact the local council office and inform them of any financial hardship that one might be facing so that if there is any leverage that is available (depending upon the debtor’s circumstances) it may be extended on the council’s behalf. Failure to respond leads to a second reminder from the council in which they may demand that instead of 10 monthly instalments, the debtor pays the entire yearly tax in total.

Should a debtor fail to acknowledge the second reminder from their local council, they will be issued a final notice which is followed by a magistrate court summons and a Liability Order.

At this stage, the magistrate authorises the local council office to use any (or all) of the following means to recover council tax debt:

  • Deduction from wages through their employer
  • Deduction from state benefits such as Income Support, Job Seeker’s Allowance, Employment and Support Allowance
  • Pension Credit
  • Universal Credit
  • Bailiff visit to premises for possession of valuables
  • Jail-time of 3 months 

Can Council Tax Debt Be Written Off?

Under very rare circumstances would council tax be written off; especially in case of a time-lapse of six years that makes it statute-barred. However, it is not at the discretion of the local council office that a council tax debt may be written off.

If a council tax defaulter provides enough reasoning for being unable to make timely payments, they may seek help through an Individual Voluntary Agreement (IVA) that enables a percentage of debt to be written off. 

However, for an IVA to be effective the total value of the debt must be £5000 (or above). Additionally, the debtors must have a regular income of £800 (or above). 

What Is An IVA?

A legal agreement between debtors and creditors in which both parties agree to a set of terms of payment is an Individual Voluntary Agreement (IVA). 

It is drafted and documented by an Insolvency Practioner; usually an accountant or a lawyer. They also design a repayment plan depending on the debtor’s ability to pay their dues. 

To put it into practice, debtors make monthly payments to their Insolvency Practitioner; who transfers those payments to the creditor(s).

Details about an IVA can be found here How an individual voluntary arrangement is set up

Who Is Exempt From Council Tax Payments?

Although council tax exemption is generally rare, should a debtor fall into any of the below criteria, they will be able to file for an exemption from future council tax bills and in some cases, claim exemption from previous council tax debt as well:

  • the resident lives in a care home
  • the resident is under hospital care
  • the resident is temporarily living at other premises to take care of someone
  • the resident is in the armed forces and is often stationed away from home
  • the resident is in prison (not for council tax debt)
  • the premises are in use of or registered by a charity
  • the premises are an annexe 
  • the premises have been repossessed
  • the premises is purchased to be demolished

To learn more about council tax exemption click here: Properties exempt from council tax – Council tax discounts, reductions and exemptions – Newham Council

Conclusion:

Being the primary source of revenue for local councils, council tax provides for various community-based services that council authorities provide residents in their area with. Despite council tax arrears, they continue to provide these services. 

Considering the benefits that one is able to derive through its timely benefit, it is advisable to maintain a timely payment schedule by budgeting one’s income. Should an individual realise that it may not be possible to do so, they must take their local council office in confidence and work out possible solutions on the basis of the resident’s circumstances. There are many solutions that may be mutually worked out; from a relaxed payment plan to temporary discounts to a council tax reduction scheme. 

FAQs: How Long Can Council Tax Debts Be Chased?

Is there a time limit on council tax debt?

Council tax debt becomes statute-barred after six years and thus cannot be claimed at the end of this period. However, local councils use all debt recovery tools that they are authorised with to recover as much of the debt as possible.

How long before a council tax debt is written off?

While local councils use their powers to the maximum in recovering council tax debt, it becomes written off after six years have passed.

How long can bailiffs chase you for council tax?

Bailiffs can only chase debtors for a period of six years as council tax debt gets written off after that. However, other means of recovery such as a court sentence of imprisonment or reductions from wages and state benefits may be used by local councils once the magistrate courts issue a Liability Order.

Can council tax arrears be written off?

If the resident’s circumstances change that qualifies them for a council tax exemption, in addition to exemption from future council tax payments, their previous debt (at times a percentage of it) may be written off. However, this is specific to individual situations. Should the resident not qualify for payment they may have to wait for six years to pass for their council tax debt (or whatever part remains of it) to be written off.

Is there a statute of limitations on council tax?

According to section 9 of the Limitation Act 1980, council tax and all other statuary debts cease to be enforceable in a court of law. 

References:

Council Tax Debt Help & Advice.

How Long Can You Be Chased for a Council Tax Debt? – FAQs & More

Dealing with Council Tax arrears

Fact Sheet – Statute barred debts | Time limits for recovering debts

Council tax

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John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.