What to do if you can’t afford to pay your council tax

We reveal the three steps you should take if you can’t afford to pay your council tax

worried mother with baby on her lap looking at phone and laptop while sitting on the sofa at home
(Image credit: Getty Images)

Knowing what action to take if you can’t afford to pay your council tax is crucial at a time when household finances are continuing to be squeezed. 

Many families are expected to find paying household bills, including council tax, increasingly difficult in the coming months as a result of rising costs on everything from food to gas and electric. But failing to pay your council tax can have serious consequences, making it vital that you get in touch with your council as soon as possible to discuss your financial situation. 

If you're not sure how council tax is calculated or what council tax band you are in, you can check your latest council tax bill, phone your council or check online. It's also a good idea to check out money-saving expert Martin Lewis' council tax tip to see if you can reduce your bill and get a refund for anything you might have overpaid.

Joseph Seager of thriftychap.com told us: “The worst thing to do if you can't afford your council tax bills is to bury your head in the sand. Avoiding the subject will only make it worse. You are much better to contact the council as soon as possible and explain your situation.”

 What to do if you can’t afford to pay your council tax  

If you are struggling to pay your council tax, you're not alone. But it's really important you don't ignore the situation as there are serious consequences for not paying your council tax. 

If you’re worried you won’t be able to make your council tax payments, there are a number of steps to follow: 

  • Check to see if you qualify for a reduction
  • Speak to your council as soon as possible
  • Agree a payment plan.

1. Check to see if you qualify for a council tax reduction

Your first step is to check if you’re circumstances qualify for a council tax reduction. This is particularly important if you’re in receipt of benefits or on a low income, as you may be able to get a council tax reduction on Universal Credit. Reductions can be between 25% and 100%, depending on your situation. 

Layla Johnson, regional manager at Creditfix, told us: “Our teams speak to so many single people who don’t know they’re entitled to a 25% discount on their council tax bill. There’s also discounts in place for people in full time education, people who receive Personal Independence Payment and in some instances people who are living with parents but own their own property. You can apply for a council tax discount on the government website.” 

2. Contact your council

If you miss a council tax payment, you must contact your council immediately to explain your situation. If you don’t, you’ll be sent a reminder notice which gives you seven days in which to make your payment. 

Joseph Seager from thriftychap.com explains: “If this is ignored, the council can demand that you pay the full annual payment. Your council can even apply to get your payments taken directly from your salary or benefits, leaving you with less to spend on other bills. The situation spirals if you ignore it.” 

3. Agree to a repayment plan

When talking to your council, see if they will help you come up with a revised payment plan. 

Paul Britton, managing director at Britton and Time solicitors, says: "Many councils offer repayment plans if you are struggling to pay council tax in the short term.

“If your financial circumstances are temporary, then a repayment plan when the debt is paid off over instalments might be the best option.”

If you’ve qualified for a council tax reduction, but are still struggling, talking to your council could also result in being offered a discretionary payment. 

Solicitor Paul Britton explains: “Some councils offer discretionary council tax payments to people on universal credit or housing benefits. If you apply, the council will look into your circumstances and decide whether to give you a discretionary payment.” 

What happens if you don't pay your council tax?

Not paying your council tax bill can have serious repercussions. Council tax arrears is a ‘priority debt’ which means you must pay it before other forms of debts like credit cards.

If you fail to pay your council tax within seven days of receiving a reminder you’ll be sent a ‘final notice’ telling you to pay all of your council tax for the rest of the year. Should you ignore this, the council will usually apply to the courts for permission to collect the debt from you and they might send a bailiff to your home or take money from your salary or any benefit payments you receive.

Creditfix’s regional manager Layla Johnson says: “Local authorities have rights that private companies don’t when it comes to debt collection, which means falling behind can have serious consequences.”

“In the worst cases, failure to pay council tax debts can lead to a prison sentence so it’s important not to bury your head in the sand if you’re struggling to pay.”

Other ways to save on your council tax bill  

If you don't qualify for a council tax reduction, or are still struggling to pay in spite of a reduction, there are other ways you might be able to reduce your council tax bill. 

Check how you pay

Council tax is usually split into 10 monthly payments which means you don’t have to pay anything for two months of the year (February and March). However, your council must allow you to apply to split the payments into 12 to make it more manageable if required. Doing so won’t lower your overall bill, but you will pay less each month. 

For example, if your council tax bill for the year was £2,000, this would cost you £200 a month over 10 months. But if you split the bill over 12 months, your payments would be reduced to £166.67 a month. Setting up a council tax direct debit will also enable you to change your payment date to a more suitable one - say, just after you’ve been paid. 

Check that you are in the correct band

It’s also worth checking you’re in the correct council tax band, particularly if you are in a higher one than your neighbours but the properties are similar. In England and Scotland, council tax bands run from A to H, with A being the cheapest council tax band, and H the most expensive. In Wales, council tax bands run from A to I, while Northern Ireland does not use the council tax system. 

Your latest council tax bill should tell you which band you are in or you can check online. If you think you are in a higher, more expensive band than you should be, you can ask for it to be reassessed through the Valuation Office Agency. If you’re lucky, you could reduce your council tax bill by a considerable sum. 

But remember, if you challenge your council tax band, it might be found that you should be in a more expensive tax band, so speak to your neighbours and see what tax band they are in and do some research online before you challenge your band. 

What other support can you get if you are struggling to pay your bills? 

If you are finding it difficult to pay your bills, there are a number of ways you can get additional support. 

For a start, more than eight million low-income households are eligible for a £650 cost of living payment, with the first instalment of £326 having already hit bank accounts and the second instalment of £324 due this autumn. 

On top of this, those in the lowest council tax bands A to D will get a £150 council tax rebate. You may have already received yours.

Almost all UK households will also receive a £400 energy rebate from October, which is when the energy bill freeze also kicks in. Additional help is also available for those struggling with their energy bills.   

Rachel Wait
Personal finance expert

Mum of two, Rachel is a freelance personal finance journalist who has been writing about everything from mortgages to car insurance for over a decade. Having previously worked at Shares Magazine, where she specialised in small-cap stocks, Rachel developed a passion for consumer finance and saving money when she moved to lovemoney.com. She later spent more than 8 years as an editor at price comparison site MoneySuperMarket, often acting as spokesperson. Rachel went freelance in 2020, just as the pandemic hit, and has since written for numerous websites and national newspapers, including The Mail on Sunday, The Observer, The Sun and Forbes. She is passionate about helping families become more confident with their finances, giving them the tools they need to take control of their money and make savings. In her spare time, Rachel is a keen traveller and baker.