Council Tax is not an optional payment; it is obligatory upon adult residents who may own or rent out a property. Unless the local council assesses individual circumstances and permits exemption from payments, inability to pay council tax is considered a legal offence with dire consequences.
What Happens If Someone Has Never Paid Council Tax?
From sending reminders to possession of property and jail-time in prison, non-payment of council tax bills can have a severe impact on the defaulter.
If someone has not been able to pay their council tax bill for a month, the local council office will send them a reminder to clear their dues within 7 days. If the residents(s) fail to clear these dues within the given time, they will be sent another reminder with a similar notice period.
After 3 such reminders, the local council office will send the defaulters a legal demand; this is a legal notice serving that demands clearance of dues. At this stage, the council may also demand that in addition to arrears the defaulting party also pays the remaining amount of council tax for the remainder of the year.
Should there be no response to the notice, the local council office can send a bailiff to the property in question who can possess valuables from the premises that will cover the amount of council tax arrears. However, prior to the bailiff’s visit, the residents will be informed by the local council office of their visit and also be informed of the due amount.
To understand the role of council tax in the UK economy, we will explore:
- the concept of council tax and what it pays for
- eligibility criteria for council tax exemption
- impact of council tax debt on other benefits
- the severity of council tax arrears
- possibility of writing off a council tax debt
- the use of IVA-Individual Voluntary Agreement
What Is Council Tax?
Council Tax is a mandatory, property-based taxation system that bounds all individuals above the age of 18 years; who may rent or own a house, to pay a certain monthly amount to their local councils. It is applicable on properties located in England, Scotland and Wales; though each local council may follow a customised council tax scheme for property valuation, tax collection and relief to be extended to residents (based on pre-determined criteria).
Depending upon the market value assigned to a property by the Valuation Office Agency, local councils send council tax bills to residents on April 1st. Residents are required to pay this amount via 10 monthly instalments between April and January. No payments are required in February and March as this is the time when local council offices are following up on unclear dues from residents to make sure that by the end of the financial year, they are not in debt.
What Does Council Tax Pay For?
Pre-dominantly a community-based tax (although some may argue that it is a personal plus property tax), council tax serves as the revenue for local councils through which they provide various facilities under their administration. These include (but may not be limited to) the following:
- police and fire services
- garbage collection and recycling
- street cleaning and street lights
- parks and swimming pools
- community centres and community grants
- housing advice and support
- libraries and education services
- children’s support and care
- elderly care
Who Is Exempt From Paying Council Tax?
Strictly speaking, there is no exemption from council tax unless an individual caters to extremely specific criteria, applies to their local council for an exemption and their application gets approved.
Should someone fall under any of the below categories, only then will they be legally exempted from having to pay their council tax bills. Despite this, they need to inform their local council office to attain formal approval:
- the resident lives in a care home and not their own home
- the resident is under hospital care
- the resident is living somewhere else; providing care to another person
- the resident is in the armed forces
- the resident is in prison (not for non-payment of council tax bills)
Then there may be situations that are property-centric; making it ineligible for council tax to be applied. These may include:
- the property is used for charity work
- it is an annexe to the main property
- the property has properties is repossessed
- it has been purchased to be demolished
The following link may be helpful to get more information on council tax exemption: Properties exempt from council tax – Council tax discounts, reductions and exemptions – Newham Council
What Are Council Tax Arrears?
If you have not paid your council tax bill, you are in debt; this means that there are arrears on your council tax bill.
According to government research titled Collection rates for Council Tax and non-domestic rates in England, 2020 to 2021 (publishing.service.gov.uk) council tax debted amounted to £4.4 billion on March 31, 2021. This shows the arrears that have been built up over the years.
In addition to the built-up debt, defaulters also have to pay court costs that local councils have built up; taking the amount due to thousands from few hundreds.
According to an article published on the BBC website, if someone has failed to pay their first monthly instalment of £167 to the local council, they can expect their bill to rise to £2065 within nine weeks. This is inclusive of the rest of their annual bill as well as bailiff fees of £310 and court costs of £84. Details can be found here: How a missed council tax bill of £167 can cost £2,065
Can Council Tax Debt Affect Other Benefits?
If the council tax debt is not cleared despite reminders from the local council office, local councils have the authority to inform the defaulter’s employers and claim the amount through deduction of the amount from the defaulter’s salary.
In addition to this if the defaulter is in receipt of any other benefits they may claim the amount from those as well. These may include:
- Jobseeker’s allowance
- Employment allowance
- Income support
- Support allowance
- Pension credit
- Universal credit
Can Council Tax Debt Be Written Off?
Writing off council debt is not at the discretion of local councils; However, if there is evidential support that a council tax defaulter is able to provide and have substantial reasoning for not being able to make timely payments, a percentage of debt may be written off through an Individual Voluntary Agreement (IVA).
If there is any debt remaining after the completion of this term, it would be written off based on the defaulting party’s inability to pay it back.
It should be noted that for an IVA to support writing off council debts the total value of the debt must be £5000 or above and the debtors must have a regular income of £800 or above. Additionally, the local council that the debtor comes under must be on the list of approved councils.
The reason for this is that while certain councils permit for a percentage of the total debt to be paid back; many others may insist upon full payment.
What Is An IVA?
An IVA is a legal agreement between debtors and creditors in which both parties agree to a set of terms of payment.
Usually, an Insolvency Practioner is the one who designs this document and as per the debtor’s ability to repay their debt, also drafts a repayment plan.
How it works is that the debtors make monthly payments to their Insolvency practitioner; (usually a lawyer or an accountant) who transfers those payments to the creditor(s).
Details about an IVA can be found here How an individual voluntary arrangement is set up
FAQs: What Happens If Someone Has Never Paid Council Tax?
Is it illegal not to pay council tax?
While it may not be illegal not to pay council tax, it is a mandatory payment made by residents to local councils. If council tax debt keeps building up and there is no response from the defaulting party to the reminders sent by the local council office, they may eventually send a legal demand to their homes. This is followed by a bailiff’s visit to the premises to claim any valuable possessions that meet the amount of tax due. However, if nothing else works and the defaulter has no sun=bstatial ground for missing out on their council tax payments, they may be sent a court notice and imprisoned for 3 months in jail.
Can I go to jail for not paying council tax?
Yes, if you have not responded to the reminders sent by the council tax office; not submitted an application to them stating the reason(s) for non-payments, they may first send a legal demand to your home; serving as a legal notice to clear your dues. Should you not be able to make payments still, a bailiff will be sent to your home to possess valuables that may amount to the size of the council tax bill. The final straw would be a court order for a jail term of 3 months.
How long can council tax be chased?
Generally speaking, the council office would chase tax debtors for six years; after which the debt will be written off. However, during this period, they would have attempted all forms of reminders and legal actions applicable; including a jail term.
How far back can council tax be charged?
Even though there are claims of council tax debt being written off after six years, however, owing to certain circumstances there may be no limit on how far back the arrears may be calculated from.
Do you have to pay council tax under common law?
While it may not be a criminal offence not to pay council tax, it is a mandatory tax paid to local council offices. In case of non-payment, lack of response to reminders, lack of evidential support that proves inability to pay council tax bills, the defaulter may be sentenced to a jail term of 3 months by a court of law.