This of our guest blog comes from Citizens Advice Bristol. This is part of a series of guest blogs, during the UK’s first Financial Capability Week to showcase the great work that numerous organisations are doing to improve the low levels of financial capability across the UK
To submit a blog on financial capability, please contact joe.cockerline@moneyadviceservice.org.uk.
Financial capability is all about giving people the skills, knowledge and confidence to make the financial choices that are right for them and more crucially, help people to avoid crises. For Citizens Advice, it can range from advising on budgeting and managing money, helping clients understand credit, banking, savings and pensions to dealing with debt issues. Often when we advise clients with debt issues, we almost always include some form of a financial capability session.
In 2015/16, Citizens Advice advised over 212,000 people on problems with council tax arrears – this was a 10% increase from the year before and marks a worrying trend. Indeed, Council tax arrears is now the largest debt issue seen by the Citizens Advice network in Wales representing 13 per cent of all debt issues. Our research and anecdotal evidence highlighted how council tax and falling behind on payments can be incredibly confusing and stressful for many. And when clients fall into arrears, enforcement action to collect can happen very quickly and with serious repercussions.
By 2020, all local authorities will have to self-fund their own services. As a result, it is likely that councils will focus even more so on the collection of council tax and arrears and thus more likely to use the full enforcement powers available to them.
In this blog we detail what Council tax is, why it’s important, who is responsible and some of the most common options to reduce the amount payable.
Firstly, council tax is determined by the value of the property and the number of adults (18 and over) who live there.
Responsibility to pay council tax lies with every adult living in the property who has the right to occupy it. This means that even if you are not the legal owner of the property but live with the owner (e.g. as a spouse) you are also liable to pay. If you rent from a landlord, then as a tenant you are the one responsible to pay. However, some landlords include council tax within the rent so it is important that you check your tenancy agreement. Ultimately, if there are multiple adults living in the property, you are all ‘jointly and severally liable’. This means that if one of you doesn’t pay, the other(s) are still responsible for the full amount.
There are a number of ways you can reduce your council tax bill:
1. If you are the only adult, your total liability can be reduced by 25% – this is called the ‘second adult rebate’. This can also apply if you have a member of your household who is a severely disabled adult or is a full time student.
2. For households on a low income or in receipt of benefits, you may be eligible for a ‘council tax reduction’. This varies across local authorities. Some can offer up to 100% reduction whereas others will only offer a maximum of 75%. Contact your local council or visit https://www.gov.uk/apply-council-tax-reduction for more information.
3. Finally there are several other discounts available for council tax but these can vary across local councils. Visit https://www.gov.uk/apply-for-council-tax-discount to see what discounts are available.
You should prioritise council tax payments as you would your rent and energy bills. This is because council tax arrears is a priority debt as failure to pay can ultimately lead to imprisonment.
Councils will issues the annual bill just before the beginning of the tax year (April) but will also give you the option to pay in 10 monthly instalments. If you are unable to pay the full amount, you should usually be able to come to an arrangement with your council. If there has been a change in your circumstances, firstly check if you are eligible for any reduction or discount. It is a mistake to stop paying if you can’t make the full instalment – you should always try to make some payment.
The council must follow a set procedure to enforce the arrears including sending reminder and final notices before going to court to obtain a ‘liability order’. This liability order (the costs of which will be added to your bill) will grant the council options to collect unpaid council tax. This includes: making deductions from wages, sending bailiffs to seize and sell items you own, have you declared bankrupt and as a last resort, even sending you to prison for up to six months.
In all these cases, it will be well worth seeking out organisations such as Citizens Advice for help and advice, as the best method of approach will vary greatly depending on your circumstances. For more information, visit www.citizensadvice.org.uk .