Council tax guidance issued to millions of UK households | Personal Finance | Finance
The number of families falling behind on their council tax has soared to 4.4 million – the highest since the aftermath of the 2008 financial crash.
New figures show a 40% rise in the number of people in arrears in just one year, up from 3.2 million in 2023, according to Debt Justice, a charity campaigning for fairer debt policies.
In total, cash-strapped town halls are now owed an eye-watering £6 billion – up from £5.5bn the previous year – just as councils face a £2.3bn funding shortfall.
Campaigners are calling on local authorities to urgently rethink their approach, warning that punitive hikes and heavy-handed enforcement will only deepen the crisis.
Bailiff crackdown
Following a campaign by consumer champion Martin Lewis, the Government has announced it will review how councils use bailiffs to collect unpaid council tax.
A Government spokesman said: “Councils have a duty to behave sympathetically and proportionately towards people in hardship when collecting tax and offer affordable payment plans.
“The Government will also consult on improving the council tax collection system.”
Tax hikes hitting hard
Despite the growing debt crisis, nine in ten councils raised council tax by the maximum 5% this year – driving average bills for Band D homes to £2,280. Second home owners have also been hit, with more than 200 councils introducing a levy that doubles their bills to an average of £3,672.
John O’Connell, chief executive of the TaxPayers’ Alliance, warned: “With a record 4.4m people now in council tax debt, town hall bosses should be focusing on helping struggling households, not hammering second homeowners with punitive premiums.
“Hiking taxes on one group won’t solve the growing crisis facing millions of others.”
Research by the campaigning group Debt Justice found that most people falling into arrears are from the most financially vulnerable households.
The Local Government Association (LGA), which represents councils, insists local authorities do all they can to help residents in difficulty.
Councillor Adam Hug, housing spokesman for the LGA, said: “All councils make every effort to collect that which is owing to them and 96 per cent of council tax is collected in the year in which it is due.
“When there are instances of unpaid council tax, it is often due to complex circumstances or people already facing hardship, and local authorities seek to work with individuals to work out a payment plan and avoid them lapsing into debt.”
The figures raise serious questions about whether the current model of council tax – set up in the early 1990s – is fit for purpose in a cost-of-living crisis.
