Martin Lewis warns millions to be affected by council tax change | Personal Finance | Finance

The removal of ‘outdated’ council tax billing and collection is being proposed in a government consultation which is open until September 12. Martin Lewis explained the consultation was seeking input from English taxpayers on their experiences and opinions of the system.

One key change could be replacing the traditional 10-month payment schedule, which sees most households not paying council tax in February and March, with a 12-month cycle.

Mr Lewis said the way council tax is run in England has not been reviewed for decades, and as a result, the systems involved in billing, collection and discounts were often “outdated” and “inefficient”.

He said MoneySavingExpert.com (MSE) has long campaigned on various issues relating to Council Tax for nearly 20 years – so this long-due consultation is hopefully a step in the right direction, even if some of the changes are still a way off.

Mr Lewis said he also welcomed changes to review penalties for households who missed payments.

He said: “Currently, missing just ONE monthly Council Tax payment can be disastrous – within three weeks, councils can demand you pay the full year’s bill. For the average household, this could mean a missed £180 payment results in a £1,770 bill just three weeks later.

“Fail to pay your entire council tax bill within a week and your council can apply to take your case to court and ask for a ‘liability order’ – a letter that lets them take more aggressive forms of debt collection, such as sending in bailiffs.

“The speed with which this can happen makes council tax debt the most aggressive form of debt collection.”

Mr Lewis said no commercial lender is allowed to behave like this, meaning constituents are treated worse than consumers.

Mr Lewis said there were no plans to review council tax bands in England, despite the fact that they have remained the same since the system was set up in 1991.

He said the Government recognised that some households could be paying more than they should and do not have a straightforward mechanism to challenge this. It’s therefore asking for evidence on how it could make the process easier.

The consultation also considered how to overhaul the Severe Mental Impairment (SMI) discount, which is worth, at minimum, 25% off a household’s Council Tax bill.

MSE’s been campaigning to raise awareness of the discount and make it easier to claim since 2016 – but it remains under-publicised, under-claimed and overly complex for many.

Other proposals in the consultation

The Government is also considering:

• Shifting the default billing from 10 monthly payments to 12. Currently, the majority of bills in England are paid in 10 instalments (from April to January). Extending this to 12 would “assist households in managing their finances” by spreading the cost, the Government says. But as many prefer to pay in 10 instalments, you’d still have the right to choose this option.

• Giving more carers and apprentices access to Council Tax discounts. One way this could be done is by increasing the amount you can earn before you stop being eligible, which hasn’t changed since 2006. But the Government is asking whether these discounts are “fit for purpose” more broadly, so other changes could also be made.

• Making Council Tax information more accessible. Options being looked at include making bills digital by default, as well as requiring councils to provide more details about what Council Tax is spent on, the support available and how to access it.