Map reveals worst local authorities for chasing unpaid council tax bills as Martin Lewis brands them ‘worst loan sharks’
A MAP reveals the worst local authorities for sending bailiffs to chase unpaid council tax bills.
Around 1.3million households in England and Wales had a knock at the door from debt collectors last year, research by the Money Advice Trust shows.
It comes as Martin Lewis described these practices as a “caricature of the worst loan sharks“.
The number of people referred to debt collection agencies varied significantly by council, according to the latest data for the year to April 2023.
The London Borough of Croydon referred the most, with bailiffs sent to 36,122 customers with council tax arrears.
Barnet Council referred 34,956 customers, and Lambeth 29,629.
Liverpool referred the most customers outside of London at 27,435, and Somerset made 24,587 referrals.
A Barnet Council spokesperson said: “Ultimately, it is everyone’s duty to pay their council tax, and it is our duty to collect it – not enforcing would mean abandoning those who need the council’s services.”
It added that help is available to those with unpaid debts through its hardship and resident support fund.
It has also launched a benefits calculator to ensure that all residents claim what they’re entitled to.
Somerset Council, which now includes Mendip, Sedgemoor, Somerset West, Taunton, and South Somerset after a boundary change, said council tax is an important income to fund services and that enforcement action is only used where appropriate.
It added that it offered those on low incomes reduced bills and has a hardship scheme, as well as agreeing payment arrangements with those in arrears.
Croydon and Liverpool City Council were contacted for comment.
The Money Advice Trust told The Sun that areas with larger populations and higher levels of deprivation tend to use more bailiffs as a result.
All councils called in bailiffs for more than two households apart from 15 which did not refer any customers to debt collectors.
For example, Hammersmith and Fulham Council have completely eradicated the use of bailiffs when recovering unpaid council tax.
Instead, the council said it intervenes early when people start to fall behind and helps them access all the support and advice available to them.
Which council's made no referrals?
JUST 15 out of the 319 English and Welsh local authorties referred no customers in council tax arrears to debt collection agencies in 2022/23.
These included:
- Bexley
- Boston
- Bracknell Forest
- East Staffordshire
- Epping Forest
- Gosport
- Gwynedd
- Hackney
- Hammersmith and Fulham
- Isles of Scilly
- Kensington and Chelsea
- Newham
- North Warwickshire
- Redcar and Cleveland
- South Holland
- West Lancashire
Only around half (48%) of all English and Welsh councils have a formal policy in place to recognise and assist residents in vulnerable circumstances, Money Advice Trust found.
This might include help like additional time to repay, referrals to wider support services or pausing chasing the debt.
However, all councils say they refer those in debt to charities for help.
This includes the Citizens Advice Bureau and debt charity StepChange.
Total council tax debt now stands at £6billion, according to the Centre for Social Justice (CSJ).
And the average amount of council tax owed by those who have approached debt advice charities has more than doubled in the past 10 years, from £756 in 2013 to £1,726 in 2023.
HOW YOUR DEBT IS RECOVERED
Martin Lewis‘ Money and Mental Health Policy Institute (MMHPI) published new data this week, revealing that local authorities are exerting increasing pressure on vulnerable households.
It stated that approximately two million people with mental health problems in the UK have fallen into a “council tax trap”.
The phrase refers to those who have missed just one council tax payment but face debt collection, fees and charges worth £100s.
Unlike debts incurred through financial products like credit cards and loans, council tax is treated as a “priority debt”.
These are arrears that people should deal with first or risk punitive enforcement action that is faster and harsher than that for other types of debt.
Local authorities have the power to subject those with council tax debt to speedy debt enforcement by sending in bailiffs.
They can also recover payments by bank arrestment. This means they request a freeze on your account until you agree to pay off some or all of the debt.
If you disagree, your council can request that the bank wire the money directly to them.
“Council tax collection practices are so aggressive they’d make the banks blush.”
Martin Lewis
According to the MMHPI, households can be hit with a “final notice” within three weeks of missing just one council tax payment, requiring them to pay their full annual council tax bill within seven days.
This could be worth up to 12 times more than the missed payment, and for the average UK household, a missed £140 payment could result in a £1,668 bill within 21 days.
Anyone who fails to pay the full annual bill can be taken to court by their council and asked for a “liability order”.
With these orders, bailiffs can then be sent to your property.
The research also found that some local authorities charge people up to £150 when they are issued with a liability order, which costs just 50p for the Ministry of Justice to produce.
Martin Lewis said: “The grotesque process couldn’t have been designed better to accelerate distress for people in council tax debt, especially those with mental health problems.
“When someone misses a monthly payment, rather than asking ‘how can we help’, many councils say ‘now you have to pay 12 times that’ – it’s like a caricature of the worst loan sharks.”
He added: “Of course, councils have faced major budget cuts, and some are struggling to survive – a policy challenge the new government must address.
“Yet plugging budget gaps by ramping up punitive action on people in debt, a significant majority of whom have mental health problems won’t fix that.”
The founder of MoneySavingExpert.com called on the government to change the rules and stop allowing councils to be legally entitled to chase unpaid council tax “in a way no commercial lender would ever be allowed to”.
He called on the government to make three changes:
- Change the regulations to give people in arrears more time before being hit with bigger bills, extra charges, court summons and bailiff action
- Cap how much councils can charge people for being issued a liability order
- Call on councils to take steps to protect vulnerable households from harm before escalating debt collection to court or bailiffs
Dealing with bailiffs and enforcement agents
IF you haven't paid a debt you might be sent a letter from bailiffs (also called enforcement agents) saying they will visit your home to collect payment.
Bailiffs (also known as enforcement agents) must give you at least seven days’ notice before their first visit, unless they are collecting unpaid criminal fines, taxes, or certain debts owed to HMRC.
They can only visit between 6am and 9pm, unless they have a court order stating otherwise.
Bailiffs must show you identification and explain why they are visiting.
They should provide a written notice detailing the debt and the amount owed.
They cannot force their way into your home on their first visit.
They can only enter through a door, and they must be invited in.
They are not allowed to climb through windows or use force to break in. However, once they have been invited in, they can enter again using reasonable force if necessary.
If you or someone in your household is considered vulnerable (due to age, disability, or serious illness), you should inform the bailiff and the creditor.
Bailiffs must take this into consideration and act accordingly.
Bailiffs can take luxury items, such as TVs and gaming consoles, but they cannot take essential items like clothing, bedding, or basic kitchen equipment.
They also cannot take items that belong to someone else, such as your partner or children.
You have the right to negotiate a payment plan with the bailiff.
If you can pay off the debt or come to an agreement, the bailiff may not need to take any of your possessions.
If you believe a bailiff has acted unlawfully or inappropriately, you can file a complaint with the company they work for or escalate it to a professional body, such as the Civil Enforcement Association (CIVEA) or the court that issued the warrant.
If you are unsure of your rights or need assistance, seeking legal advice from a solicitor or a debt advice charity can be beneficial.
GET HELP WITH COUNCIL TAX DEBT
Struggling households can get help with council tax bills, and if you’re worried about falling behind, it’s worth checking out what you could get.
If you can’t pay your council tax bill, let the council know immediately rather than putting it off.
Your local authority may let you pay your council tax in smaller amounts or if you’re on a low income or benefits you may be able to get a council tax discount.
They will also be able to signpost you for extra support you could be eligible for.
If you miss a council tax bill, you will get a reminder from the council around two weeks after its due date.
If you pay within seven days of this point, you don’t need to do anything else.
The debt will be cleared and you can carry on paying your council tax in instalments.
If you don’t pay within seven days of the reminder, you’ll be hit with a final notice which tells you to pay all your council tax for the rest of the year within seven days.
If you don’t do this, you will be slapped with a liability order which could lead to enforcement action such as bailiffs, taking a fixed percentage from your pay packet, deducting benefits or applying to have you declared bankrupt.
How to get free debt help
There are several groups which can help you with your problem debts for free.
- Citizens Advice – 0800 144 8848 (England) / 0800 702 2020 (Wales)
- StepChange – 0800138 1111
- National Debtline – 0808 808 4000
- Debt Advice Foundation – 0800 043 4050
You can also find information about Debt Management Plans (DMP) and Individual Voluntary Agreements (IVA) by visiting MoneyHelper.org.uk or Gov.UK.
Speak to one of these organisations – don’t be tempted to use a claims management firm.
They say they can write off lots of your debt in return for a large upfront fee.
But there are other options where you don’t need to pay.
PUT A PAUSE ON DEBT
Struggling households can pause council tax payments and other bills for 60 days.
The breathing space scheme protects hard-up Brits from bailiffs and prosecution for two months.
It also prevents creditors from adding interest or extra charges on top of your existing debt during this time.
The scheme applies to council tax arrears and other outstanding debt, including tax and benefit overpayments, as well as credit cards and loans.
During this time, households will receive professional debt advice to find a long-term solution to their financial difficulties.
You can find out more about who’s eligible and how to apply.
COUNCIL TAX REDUCTIONS
IF you're struggling with your council tax costs, it's worth checking out whether you're entitled to reduce your tax bill, which can save you thousands of pounds.
Some people can even get their bills slashed by 100%, meaning they wouldn’t pay anything at all.
Here are all the discounts available.
If you’re a pensioner
If you receive the guaranteed credit part of pension credit, you could get a 100% discount on your council tax.
If not, you could still get help if you have a low income and less than £16,000 in savings.
If you live alone, you will get the 25% reduction, even if you’re not entitled to any benefits.
If you live alone
If you’re the only adult in your home, you can get a 25% discount on your council tax bill.
This includes if you’re a single parent with children under 18 in the house.
Usually, you’ll need to let your local council know to get the reduction.
Even if other adults are in your home, you might still get the 25% reduction, as some groups of people are “disregarded” for council tax purposes.
If you’re a student
Households where everyone is a full-time student do not have to pay any council tax.
To qualify as a full-time student, your course must:
- Last at least one year
- Involve at least 21 hours study per week
If you’re between 18 and 20 and doing A Levels or equivalent, your course must last at least three months and involve at least 12 hours of study a week.
If there is an adult who is not a student in your household, they will need to pay council tax, but should still qualify for a discount if everyone else is a student.
If you have a disability
If you or someone you live with has a disability, you might be able to get a reduction on your council tax bill, or even get a complete exemption so you pay nothing.
The disabled band reduction scheme is designed for people who need to live in a larger property, specifically due to a disability.
For instance, you might need an extra bathroom or kitchen for the disabled person or extra space in the halls to manoeuvre a wheelchair.
If you’re eligible, you’ll pay council tax at the next rung down.
For instance, if you live in a band D home, you’ll pay at the band C level.
If you’re in the lowest band, you get a 17% bill reduction.
Plus, if someone in the household has a severe mental impairment, you should be able to apply for a discount on council tax.
To qualify, you’ll need a certificate proving that the person is severely mentally impaired, such as from a GP.
If you’re severely mentally impaired and live alone, you should get a 100% reduction on your bill.
If you’re on a low income
If you’re on a low income, you might be able to apply to your local council for council tax reduction.
To find out if you’re eligible, check with your local council, as the rules vary depending on where you live.
You’ll need to give information about your income and personal circumstances.
If you receive benefits or have other people living with you, this might impact the level of reduction you receive.
If you qualify, the council will work out your new council tax bill and tell you how much you need to pay and when.
If you receive Universal Credit, income-based jobseeker’s allowance (JSA), income-related employment and support allowance (ESA) or income support, you might be eligible for a discount.