Help With Council Tax Debt

When you’re juggling rent or mortgage payments, rising food costs, energy bills, and everyday living expenses, council tax can start to feel like something that can wait. The problem is that councils are usually quick to take action once payments are missed. Reminder notices, court action, and council tax debt collectors can follow, often much faster than with other debts. By the time enforcement starts, the balance is higher, and the situation feels harder to control.

At NDH Financial, we help people across England, Wales and Northern Ireland deal with council tax debt as part of wider financial difficulties. We’re licensed insolvency practitioners and have over 15 years’ experience helping people find a way forward.

If council tax arrears are causing problems alongside other unsecured debts, an Individual Voluntary Arrangement (IVA) may help. Your Insolvency Practitioner will work with you to assess your situation and set one affordable monthly payment. Council tax arrears can be included, enforcement action can stop, and any remaining qualifying, unsecured debt included in the IVA is written off**.

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What is Council Tax debt?

Council tax is a charge paid to your local council to fund everyday services in your area, like rubbish collection, schools, social care, and emergency services. It applies to most residential properties and is usually paid in monthly instalments throughout the year.

The amount you pay depends on your council tax band and the rates set by your local council. Unlike credit cards or loans, council tax isn’t linked to spending or borrowing. Once the bill is issued, the full year’s charge is due.

Because it pays for essential local services, council tax is treated differently from most other debts. It sits alongside rent or mortgage payments, utilities, and food costs.

Is Council Tax a priority debt?

Council tax is classed as a priority debt, which means it needs to be dealt with ahead of most other debts. Priority debts are linked to essential services or legal obligations, and falling behind on them can have more serious consequences than missing payments on credit cards or loans.

Council tax sits alongside other priority costs like rent or mortgage payments, gas and electricity, and TV licence fees. Because of this, councils have stronger powers to recover unpaid balances than most lenders.

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NDH Financial can help free you from the shackles of your debt.

Call us on 0800 002 9051 or apply below.

If you’re an existing client, please call us on 0800 002 9061.

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Will Council Tax arrears affect my credit rating?

Council tax debt does not appear on your credit file in the same way as credit cards or loans. Missing council tax payments alone won’t automatically show on your credit report or lower your credit score.

However, problems can arise if the situation escalates. If the council takes court action and a County Court Judgment (CCJ) is issued, this will appear on your credit file and can affect your ability to get credit for up to six years.

Council tax arrears can also affect your finances in less direct ways. If enforcement action leads to higher balances or deductions from income, it can make it harder to keep up with other payments, which may then impact your credit record separately.

What happens if I can't pay my Council Tax instalments?

If council tax payments are missed, councils usually follow a set legal process. This often moves faster than with credit cards or loans.

Reminder notice – If you miss a payment, the council will issue a reminder asking you to bring the account up to date. If this isn’t dealt with, you can lose the right to pay by instalments.

Full balance becomes due – Once instalments are cancelled, the council can ask for the full council tax charge for the year to be paid in one go. For many households, this isn’t affordable.

Liability order application – If the balance remains unpaid, the council can apply to the magistrates’ court for a liability order. Court costs are usually added at this stage, increasing what you owe.

Recovery action – After a liability order is granted, the council has the legal authority to recover the debt. This can include using council tax debt collectors, taking money from wages, or making deductions from benefits.

Ongoing pressure if unpaid – If no arrangement is put in place, recovery action can continue until the debt is cleared.

What Is a Council Tax Liability Order? - A council tax liability order is a legal decision made by the magistrates’ court that confirms council tax is owed. It gives the council formal authority to recover the unpaid balance. The liability order is made against the person or people named on the council tax bill. If the bill is shared with a partner or housemate, the order can apply to everyone responsible. Once a liability order is granted, court costs are added to the balance. From this point, the council can use recovery methods allowed by law to collect the debt. This is often when council tax arrears begin to feel much harder to manage.

Can I ask for a Council Tax discount?

If you are unable to afford the Council Tax payments, notify your council as soon as possible.

They may be able to offer you a council tax reduction if:

You are on a low income
You are a student
You’re living on your own
You are on benefits – like universal credit, jobseeker’s allowance and income support
You are in prison for a crime unrelated to Council Tax payments

You’re the only adult living on your property
You are required to live in a larger home due to you or a cohabitant dealing with a disability.
You are mentally impaired
You live with someone who is mentally impaired
Certain counties in England and Wales will take into account if you are a caregiver for someone in your household.

In order to apply for this reduction, you will need to make sure you have the valuation of your home and the amount of Council Tax you would pay on a property with that valuation. If you have had any changes to your circumstances since you last paid your Council Tax, a valuation officer will be able to confirm if the changes will impact the Council Tax you are eligible to pay.

Can you write off Council Tax debt?

Council tax debt doesn’t get written off simply because you can’t afford to pay it. Councils are required to collect it, which is why they tend to take action quickly when payments are missed. However, council tax arrears can be dealt with through formal debt solutions in certain situations.

Individual Voluntary Arrangement (IVA)

An IVA is a legally binding agreement arranged and supervised by a licensed Insolvency Practitioner. It looks at your income, essential living costs, and debts, then sets one monthly payment based on what you can realistically afford.

Council tax arrears up to the date your IVA is approved can usually be included. Your Insolvency Practitioner will work with you to assess your situation and prepare a proposal for your creditors.

Many people repay only part of what they owe through an IVA. A debt write off of between 25% and 73% is realistic in many cases, although the amount written off depends on your individual circumstances and must be approved by your creditors*. Once the IVA is completed, any remaining qualifying, unsecured council tax debt included in the arrangement is written off**.

Ongoing council tax payments must still be kept up during the IVA.

Check if You Qualify for an IVA

Debt Relief Order (DRO)

12-month DRO period.

DROs are only available in England and Wales and are not suitable if your income or assets are above the set limits.

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Bankruptcy

Bankruptcy can write off council tax arrears, usually within 12 months. However, it is a serious step with significant consequences.

Council tax arrears owed up to the date of bankruptcy can usually be included, but ongoing council tax after the bankruptcy order must still be paid, and new arrears will be treated as fresh debt and aren’t written off.

Assets like savings, vehicles, or property may be sold, and you may have to make payments for up to three years if you have spare income. Bankruptcy also affects your credit record for six years and can impact employment in certain roles.

Because of the level of control and potential loss of assets, bankruptcy is usually considered only when other debt solutions are not suitable.

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Tips for Dealing With Unpaid Council Tax

Council tax can feel harder to manage than other bills because it isn’t something you can easily avoid. Even when you cut back elsewhere, the amount due usually stays the same, which makes arrears feel harder to shift once they start to build.

Don’t Ignore Council Letters

Councils move quickly when payments are missed. Opening letters and responding, even if you can’t pay in full, helps keep options open and avoids unnecessary costs being added.

Check Your Bill & Council Tax Band

Make sure the bill is correct and that your property is in the right council tax band. If it isn’t, you may be paying more than you should.

See if You Qualify for Council Tax Reduction

If you’re on a low income or receiving benefits, you may be entitled to a reduction. This won’t usually clear arrears, but it can lower ongoing payments and prevent the debt from growing further.

Prioritise the Ongoing Council Tax

Council tax is a priority debt. Keeping up with current payments, even if arrears remain, helps limit further action while you look at longer-term solutions.

Get Professional Debt Advice

If you’re struggling to pay your council tax, and the arrears are part of wider debt problems, speaking to our debt consultants can help. We will work with you to review your income, essential living costs, and debts, and explain which options may be suitable for your situation.

Struggling With Council Tax Debt? Contact NDH Financial Today

When council tax payments are missed, there’s often very little time to catch up. Instalments can be cancelled quickly, leaving you liable for the full balance for the year. For many people already dealing with rising living costs, that can feel overwhelming and difficult to deal with alone.

Our debt consultants will work with you to review your income, essential living costs, and council tax arrears, alongside any other debts you may have. They’ll explain which options fit your situation and what each one involves. If an IVA is suitable, it can include council tax arrears and set one monthly payment based on what you can realistically afford, with a clear endpoint.

The consultation is confidential, non-obligatory, and focused on practical next steps.

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Have More Questions? Our IVA Learning Hub Can Help

We know you might have questions and that's fine. We can answer most of those on our call.

But we've also built our learning hub so that you can learn more about an IVA and see if one is right for you.

Click below to check it out.

IVA Learning Centre