Dealing with Council Tax Arrears

Council Tax Arrears: the debt no-one asks for

Unlike other debts, such as credit cards and loans, Council Tax debt is not a debt you take out or ask for. It’s a local authority charge which we all have to pay when we have a home, unless we are eligible for a reduction, discount or exemption. It is sometimes called an involuntary debt.

This means even if you have avoided taking out other debts, you can still end up with debt if you miss Council Tax instalments and these can quickly build up when things become difficult.

How does Council Tax work?

The way Council Tax works is every year you become become liable for an annual charge. You normally receive your annual bill in March.

Your Council Tax bill is broken down into three parts. First there is the Council Tax charge; then there is the water charge; and third there is the sewage charge.

When you get your Council Tax bill, you get the opportunity to pay your bill in ten monthly instalments.

Why is it important not to ignore Council Tax Arrears?

It is important to not ignore Council Tax debt. In addition to the fact that you accrue it without borrowing, you have to remember you get a new bill every year, so it will continue to grow.

Ultimately, this may mean you could be subject to debt recovery procedures executed by Sheriff Officers or made bankrupt. Where you own your own home, this could mean you may lose it.

Reducing your Council Tax Liability – Discounts and Exemptions

You may be entitled to a 25% discount in certain circumstances. These are:

  • You live on your own; or
  • You have a resident carer who is not your spouse or partner or you only live with your child and they are your full-time carer.

You can also be entitled to a 25% discount if you live with another person, who would be exempt from paying Council Tax if they lived on their own.

Examples of when someone may be exempt for Council Tax, is:

  • They are a full time student and in full time higher education and live on their own, or with other full time students; or
  • They have a severe mental impairment.

A property can also be exempt for Council Tax for a number of other reasons, such as it is empty or was previously occupied by a full-time student.

It is advisable to ask your local authority whether you qualify for an exemption or discount.

Reducing your Council Tax Liability – Council Tax Reduction

You may also be able to reduce your liability for Council Tax by applying for Council Tax Reduction. This is a means tested benefit that is based on your income and can be applied for from your local authority.

You can explore your entitlement to council tax reduction and other benefits by completing a benefit check. To carry out a benefit check, visit our page here.

What happens when you don’t pay your Council Tax?

When you miss a payment to your Council Tax, you will receive a letter from your local council giving you seven days to make your monthly payment.

It will inform you that you have 7 days to make the payment and if you fail to make the payment you will lose your right to pay by instalments and become liable for the full amount.

If you make the payment and then miss another payment later in the year, the next reminder will inform you that if you miss a third payment you will not receive a reminder.

Council Tax Arrears Final Demand

If you fail to respond to the reminder and don’t make the payment, you will receive a final demand giving you 14 days to pay the full amount outstanding.

Many local authorities at this point may still enter into a repayment plan with you, but this has to be individually negotiated with them.

Council Tax and Summary Warrants

If you fail to pay the full amount off within the 14 days the Council can then apply for a Summary Warrant.

Summary warrant are the equivalent of court orders, however, unlike normal court orders, when a local authority applies for a Summary Warrant, there is no court hearing. However, when a Summary Warrant is granted a 10% surcharge is applied to your debt. This is a one off charge and unlike judicial interest that is applied to normal court orders, it is not applied annually.

Local authorities can then use the summary warrant to execute diligence. This is a legal term in Scotland that is used to describe legal procedures that can be used to recover a debt.

Examples of diligence and the most commonly used in Scotland are:

Before a Local Authority can execute any of these types of diligence, it first must serve a Charge for Payment. A Charge for Payment is a formal demand for payment that gives you 14 days to pay your debt. If you fail to pay your debt within 14 days, Local Authorities can then instruct Sheriff Officers to execute any of the above types of diligence.

An expired Charge for Payment also constitutes apparently insolvency, which means where you owe more than £3,000, the Council may be able to petition the court for your bankruptcy.

Where your only income is social security benefits, such as Job Seekers Allowance, Employment Support Allowance or Universal Credit, the Council may recover the arrears by direct deductions from your benefits.

Council Tax Arrears and Time to Pays

Once a Summary Warrant and a Charge for Payment has been served, there are still options open to you to try and pay the debt back by instalments. This is by using a formal solution that is provided by the Court where you can apply for a Time to Pay Order. This can be applied for after a Charge for Payment has been served.

Normally, the Local Authority would expect the arrears to be repaid within the financial year, before the next years Council Tax is due. However, the Court can allow longer, but you need to bear in mind that when the new financial year comes you will need to be able to make your current year’s monthly instalments in addition to whatever you offer to pay when your apply for the Time To Pay Order.

The Debt Arrangement Scheme and Council Tax

You can also apply for a Debt Payment Programme under the Debt Arrangement Scheme if you have a Summary Warrant granted against you and are worried a local authority may serve on you a Charge for Payment or execute diligence, or even raise a petition to make you bankrupt.

Once a Debt Payment Programme under the Debt Arrangement Scheme is approved, Sheriff Officers cannot execute diligence or serve a Charge for Payment on you. They also cannot raise a petition to make you bankrupt.

Statutory Moratoriums and Council Tax Arrears

If you require time to consider your options, whether that is to apply for a Time to Pay Order or a Debt Payment Programme under the Debt Arrangement Scheme or even whether you want to consider a form of personal insolvency, such as a Protected Trust Deed or bankruptcy, you can use a Statutory Moratorium to give you breathing space.

Statutory Moratoriums give you six weeks protection to allow you to consider your options. You can only use a Statutory Moratorium once in any 12 month period.

Comments

  1. Stewart

    My father in law passed away in 2017. My wife was the executor and concluded his estate in 2019 once his house sold using a solicitor. Included in this , was a payment for council tax (£90). She has now received a final demand for an outstanding council tax balance of over £500 which seems surprising as we were led to believe everything had been settled. Is she still liable for this as it’s now nearly 18 months after everything was wound up and we were led to believe that the solicitor had paid the original debt?

    1. Scottish Adviser Post author

      I cannot give you a definitive answer, however, the basic principle is executors can be personally liable for the debts owed by an estate if they have not would the estate up properly.
      However, estates do need to be wound up, so there has to be point when debts have to get paid.
      The Local Authority should have submitted a claim on the Estate, and generally, the lawyer should have paid it before distributing funds to beneficiaries.
      I would go back to the lawyer. Did the Council submit a claim, was it paid?
      The debt may exist, but that doesn’t mean your wife is liable for it if everything was done correctly.
      One final point, was the property lying empty for a period. Have you discussed with the Council if there was a period the property may been exempt from Council Tax

  2. Julia

    Hello I am a dual UK Australian citizen who lived and worked in Scotland for many years ( I own a small flat in rural Scotland ) . I am currently in Australia and blocked by Government policy from being able to come back till the end of 2021 it seems . Though I have tried to negotiate with my local council they are still charging me council tax and after one year will charge 200% of this tax as the flat will have been empty for a year but still has a bed and couch in it ( which I couldn’t move out because of the covid lockdown at the time) . I am unemployed with little savings and am very worried I will lose everything . I am not sure what to do or who might help me now that I am so far away and worry I will have to abandon the flat .Its quite old and though I put a lot of money towards doing it up , it is still not suitable for long term rental and I have no money to pay for a home and energy report to consider a sale yet . Can you advise me if any positive steps I might take, or legislation or organisations that might be able to help while I’m so far away during this pandemic?

    1. Scottish Adviser Post author

      Hi Julia

      Unfortunately, there is not a lot you can do, other than put it up for sale, which as you have said will cost money you don’t have at present.

      Its at a local authority’s discretion how they treat vacant properties after 12 months and they can charge up to 200% council tax, to discourage essentially properties being left empty and force owners to either sell the property or to make it available for rental.

      This is particularly the case in rural areas where there may be a shortage of suitable housing for local people.

      If this is the approach of the local authority of the area where your property is situated there is not alot you can do.

      The only way, however, the local authority can hope to recover the debt at present and force the sale of the property, however, is through sequestration (bankruptcy).

      That however is only possible if you owe enough to them and at present because of Covid emergency laws that amount has been increased to £10,000 (it was £3,000 and may return to that after March – or next September, if they extend the laws again).

      I would imagine it will be no where near this at this point, so it is likely your property is not at imminent risk at present, and hopefully you will be able to return next year and get things sorted.

  3. stevie

    Dear Scottish advisor,

    I would like to know if the “minimum protected balance” applies with council tax arrears?

    So, if I have any less than £529.90 in my bank account at any one time, then my account cannot be touched. Is this correct?

    1. Scottish Adviser Post author

      Hi Stevie

      The Minimum Protected Balance applies to Bank Account Arrestments (legally known as Actions of Arrestment and Furthcoming).

      It doesn’t matter what type of debt the Arrestment is used for: if your account has £529.90 or less in it, it is protected. However, the protection may not apply where you have multiple bank accounts with the same bank and although none of the balances are more than £529.90, as a whole they are.

      Equally, it does not mean the Sheriff Officers cannot still try to execute a bank arrestment (even if it fails). This may mean you get Sheriff Officer fees added to your debt for this. Also if a bank arrestment fails, this does not stop your bank adding a £25 admin fee to your account, as the Minimum Protected Balance doesn’t apply to this. You can ask your bank to waive the fees.

      You should also bear in mind that Sheriff Officers may attempt to recover the funds using other procedures, such as Wage Arrestments and Attachments.

      The Council may also apply for direct deductions to be taken from your benefits, if you are in receipt of any, to recover Council Tax Arrears

      If you are worried about any Sheriff Officer action and want protection whilst you seek advice and assistance, you can do this by applying for a Statutory Moratorium. This gives you 6 months protection and stops all Diligence, including Bank Arrestments.
      Also check if you were entitled to any reduction to your bill doing a
      Benefit Calculation online.

  4. Pamela

    Hi
    I got a letter saying that I have to pay £92.05 by the 3rd of Augus. I did not remember getting any letters in March saying this, but they said I did they are wanting £28 a month. I told they them that I can not afford that much as I am on Universal credit. Someone told me that if I offer to pay it back at £10 a month they have to accept that offer. I just want to ken if this is true ? Any advice you could give would be very helpful

    1. Scottish Adviser Post author

      Hi Pamela

      There are two things here. The first is arrears and then there is your current liability for Council Tax.

      You should be getting full Council Tax Reduction if your only income is Universal Credit and also possibly a 25% Single Person Reduction.

      However, you are also liable for Water and Sewage, so although you may not have any liability for Council Tax, you are still liable for Water and Sewage. Everyone has to pay this, even if you are in receipt of Universal Credit, although you may be entitled to a 25% reduction if you are a single person.

      This sounds like, what the £28 per month is.

      I am not sure what the £92 is. It could be arrears for the months you have not paid since April.

      Councils will not normally accept an offer as low as £10 per month towards arreara as they can deduct more from your Univeral Credit for arrears.

      It may be if you have arrears, they may accept somewhere in the region of £10 per week (towards your arrears and current liability). They may also extend your payments to February and March to allow you to catch up (as you normally only pay between April to January – 10 months). This may mean you can pay a bit less.

      If your not sure you should speak to your local advice agency who can help you negotiate with the Council.

      You can also do an online benefit calculation to see if there is anything else you can claim.

  5. Ronnie

    Hi Alan

    I found myself around 5 years ago, out of the blue being taken to court about historic council tax debts in properties that were HMO, and I found myself liable for others debts which I just had to accept. However, I was in a payment scheme already with Scott and Co, and they refused my increases and I was taken to court instead and given an Inhibition order on our home.

    I have saved a fair amount and got in touch to ask what the amount was, only to find that i was also liable for £2,222 worth of interest too, which then put settling the debt out of my reach again totally.

    I feel trapped. Was it legal to take me to court in the first place, as I had never missed any payments with Scott and Co? Can i have the interest payments stopped too???

    1. Scottish Adviser Post author

      Hi Ronnie

      It is unusual to be taken to Court for Council Tax, in the sense it’s a traditional action for payment of money and a date for a hearing is set. Normally Local Authorities will issue a Summary Warrant, which although it is issued by the Court, is an automated process and doesn’t involve a hearing.

      Both methods are competent, however, and it’s the Local Authority’s choice.

      The reason I think it’s the former traditional process that is being used is:

      A) they are adding judicial interest of 8%, which you cannot do if the Summary Warrant procedure is used; and

      B) They have registered an Inhibition. This is not competent with a Summary Warrant.

      There is, however, nothing untoward or wrong about what the Council has done, but unusual.

      They also would not have bound themselves into not taking Court Action when they entered into a repayment plan.

      In essence, the debt is recoverable and the interest can still be added daily (8% per year). You can also be liable for any fees incurred by Scott and Co for any Dilgience they execute.

      In terms of stopping the interest, unless they agree to it, the only way you can prevent them from doing so is by entering the Debt Arrangement Scheme. This may be worth considering as it will also protect you from Bankruptcy and other Diligences being executed.

      It may, however, also affect your credit rating.

      You can find out more about DAS here and also visit my page about obtaining free advice in Scotland, though no-one can charge you a private management fee in Scotland for entering this, so you can use a public, private or third sector organisation.

  6. Alan

    Hello,
    The Highland Council has very recently imposed a deduction to my Universal Credit for a Council Tax Bill from 1993! (£ 186.18).
    I feel that this is very much past history and should be written off. Secondly, I would have thought they could of at least waited until I found full-time work. (FYI, I lived and worked abroad for over 20 Years and only returned to my home Town, Inverness 2 years ago)
    Is there not a time limitation for this?

    Thank You,

    Alan

    1. Scottish Adviser Post author

      Hi Alan

      There are what’s called Prescription rules.

      Read more about them here (When Does Debt Become Statute Barred?)

      Basic principal for Council Tax is if you have not paid anything for 20 years and they have not made a relevant claim, such as a wage arrestment etc in 20 years, it is prescribed.

      Write to them and ask for a statement of all payments for that year. If there is a 20 year gap, ask them if it is prescribed and if not why not. Every time a payment is made the 20 years begins again.

  7. Philip

    Hi,
    I have received a Summary Warrant regarding council tax for a property I once owned – but for a period that I didn’t own it. The amount asked for (over £4000) relates for a period from 2004 to 2008. I sold the property in 2006. This, can be verified on the ROS Web site, but the council apparently are unable to look up this information. They have never chased me for this debt before now – this is the first communication I have received (although I have moved multiple times so it’s possible any letters never reached me). How do I prove I sold a property 14 years ago if the ROS Web service isn’t good enough? And how do I stop them applying for a bank arrestment or whatever in the meantime. I also dispute the amount being demanded for the time I WAS there, but that’s another issue

    1. Scottish Adviser Post author

      Hi Philip

      I would seek to make a formal complaint and provide as much evidence as possible to show not only you didn’t own the property,but you didn’t live there, as liability can arise not just from ownership, but residency.
      This could be legal paperwork, an extract from the Land Registry and also proof of you living elsewhere.
      If the Council don’t update your complaint and amend their accounts, appeal their decision to the Valuation Tribunal. You can also complain to the Scottish Public Service Ombudsman.

  8. Drew

    Hi.

    My divorced mother, who lives alone, was recently granted Council Tax exemption due to mental health issues. She still however has an outstanding four figure balance which was only discovered upon a sibling, who had resided with her all his life until 5 years, ago moved out. I have subsequently been awarded POA to look after my mother’s affairs. My mother has no owings since the time of my siblings departure and has been paying a modest amount of the owed sum each month. Upon her death would my sibling be responsible for mum’s outstanding council tax debt? Would it be myself? Or would there be a chance the council would write this off? Your advice would be most welcome.

    1. Scottish Adviser Post author

      Hi Drew

      Thanks for your question and I will do my best to answer it as simply as I can.

      First, if your Mum lived with your sibling when she got the Severe Mental Impairment (SMI) exemption, it would only have been for 25%, as she lived with your sibling. If she lived on her own, or from the point she lived on her own, it would have been 100% exemption.

      We should, therefore, break this into two periods. The first is her Council Tax liability for the period before she got her SMI and the period afterwards.

      In terms of the period before (and you should check the SMI could not be backdated till the point she had a qualifying benefit, like Attendance Allowance, Disability Allowance or Personal Independence Payment), normally a sibling wouldn’t be liable with their Mum.

      She would normally be liable on her own, unless the house they lived in was jointly owned by both them or there was a joint tenancy. If not, it would normally be your Mum who was liable for the Council Tax.

      If the house was jointly owned or there was a joint tenancy, they may be jointly liable for it. So if one cannot pay, the Council can pursue the other for the full amount. This is known as the Council Tax Liabilty Hierarchy. So normally the owner of the property is liable, or the tenant is liable, or where people co-habit as husband and wife they are joint and several liable. Children living in the family home are not usually joint and several liable, unless they are joint owners or tenants with their parents.

      Now for the period after the SMI was awarded, your Mum could not normally be held liable, even if it was only a 25% discount that was applied (as she didn’t live alone), as she has a SMI.

      It is likely in such a case, your Sibling was liable (working down the Council Tax Liability Hierarchy, as your Mum couldn’t be liable)

      The Council would then pursue your sibling for these arrears.

      However, it may be that for this period your sibling may have been entitled to a discount themselves as a resident carer for your Mum, this in total would mean a 50% discount (SMI plus Resident Carer). This would need to be applied for.

      Look on your local Council website and search for resident carer discount. They will normally have information about this on their site.

      Now what happens on the death of your Mum is different again.

      First her estate can only be held liable for the debts she was liable for, so that is why it is important to work out what she is liable for.

      I would argue she cannot be liable for any Council Tax debt from the point she was awarded an SMI, but she could be solely liable, or jointly for any arrears from before that period.

      If you live with her now you could be liable for the Council Tax (less her discount), but you may be entitled to a Resident Carer Discount.

      However, on her passing the Council can only claim against her estate for the debt she owed.

      It may be worth reading my page on What Happens to your Debts when you Die.

      If you are appointed her Executor, you have to wind up the estate properly and if she owns her home you may need to employ a solicitor. Also if her estate is worth more than £35,000 you normally have to employ a solicitor.

      The basic rules are the funeral costs must be paid first and then your Mum’s debts. You cannot be held liable for her debts, unless as Executor, you don’t wind up the Estate properly.

      So if there are funds to pay her debts, you must do this, or they can pursue you. If there is no money to pay her debts, then you cannot be held liable. If there is only enough to pay them partially, then you should take legal advice as you may need to bankrupt her estate.

      If your Sibling is jointly liable for any of the Council Tax debt and your Mum’s Estate cannot pay it off in full, then they may pursue your Sibling.

      If he isn’t jointly liable and there isn’t enough to pay the debt off, they will then write it off (unless the estate is made bankrupt and they think they can make a claim on the bankruptcy).

      Again to emphasise, your Mum cannot be held liable for any period she had the SMI.

      It may be worth contacting your local Citizen Advice Bureau or Local Authority Money Advice Service to ask if they can help your work out what your Mum is liable for and what she is not liable for.

      This will make it a lot easier for you to work out.

  9. Peter

    I recently moved after my wife died when the council found out they stopped my council tax reductions and are demanding I give them bank statements and the bill for my wife’s funeral her headstone costs the purchase and selling price of the property and any purchases for furniture and fittings for my new home can they do this

    1. Scottish Adviser Post author

      Hi Peter

      Can I offer my condolences first on the passing of your wife.

      They can ask for the information they have requested.

      Basically you and your wife will have been joint and several liable for your Council Tax and any arrears.

      As such the Council, as a Creditor, have a right to make a claim on your wife’s estate.

      Paying all her debts is one of the responsibilities of her Executor.

      So asking for evidence of her funeral expenses, is to help establish what was left in her estate to pay her debts, as these costs need to be deducted first.

      You can find out more about dealing with debts on the death of someone from my page on What Happens to your Debts when you Die.

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