Cost Of Living Crisis: What Happens If You Can’t Afford to Pay Your Council Tax?

Cost Of Living Crisis: What Happens If You Can’t Afford to Pay Your Council Tax?

Spiralling expenses are one of the reasons why homes get repossessed. Homeowners may be able to afford their monthly mortgage payments, but other expenses soon build up until they are unable to afford their mortgage leading to arrears, and then to repossession. The recent news that nearly all councils are planning to increase their tax on residents by 4.99% in April 2024 is another blow to homeowners during the cost of living crisis. So, what happens if you can’t afford to pay your council tax?

This article aims to present the ramifications of failing to meet this obligation and to provide guidance for those facing financial difficulties.

What is Council Tax?

Council tax is a mandatory levy imposed on residential properties by local authorities throughout the UK. Its importance lies in funding essential public services that contribute to the well-being of communities. Failure to pay council tax can have serious financial and legal consequences.

Consequences of Not Paying Council Tax

Ignoring council tax payments can lead to a cascade of repercussions.

Initially, homeowners can expect to receive reminder letters and notices from their local council requesting payment after 7 days of receiving the letter. A second reminder will be issued to urge homeowners to settle their outstanding dues.

If you do not pay after these reminders you will have to pay the entire amount for the tax year (April 1st - March 31st).

Failure to respond may result in additional charges for legal fees added to the outstanding amount, exacerbating the financial burden.

Issuance of Court Summons

Should the situation escalate, the council may escalate to issuing a court summons called a ‘liability order’. This formal legal document requires the recipient to appear in court to address their non-payment of council tax if they wish to explain their reason for missing payments.

Receiving a court summons is a significant development and should not be taken lightly. It signals the initiation of legal proceedings by the council to recover the outstanding debt.

Enforcement Action

If left unresolved, the council has the authority to take enforcement action to reclaim the unpaid council tax. This can involve employing bailiffs or enforcement agents to seize possessions from the property to cover the debt.

Furthermore, they may pursue an attachment of earnings order, deducting money directly from the homeowner's wages to settle the council tax arrears.

If you receive benefits your council can also apply to take money from:

  • Employment and Support Allowance
  • Income Support
  • Jobseeker’s Allowance
  • Pension Credit
  • Universal Credit

Potential Consequences for Homeowners

For homeowners, the repercussions of non-payment can be particularly severe. Beyond the immediate financial strain, there's a risk of losing possessions if enforcement action is taken or, if your situation is particularly bad, entering into arrears on other payments.

Additionally, non-payment of council tax can have a detrimental impact on one's credit rating, making it more challenging to access financial products or services in the future. In extreme cases, it could even lead to bankruptcy.

What Can You Do If You Can’t Pay Your Council Tax?

Many councils offer council tax reduction schemes aimed at assisting low-income households. Additionally, homeowners can explore the possibility of arranging payment plans or seeking financial advice to manage their obligations effectively.

This all starts with one critical action:

Speak to the Council

Effective communication with the council is crucial for homeowners facing difficulties in paying their council tax.

By notifying the council of their financial situation, individuals can potentially access support or alternative arrangements to alleviate the burden. Proactive engagement with the council demonstrates a willingness to address the issue responsibly.

Councils want to avoid taking further action and are always willing to work with individuals to get their council tax paid.

Cost of Living Crisis and Repossession

The news about increasing council tax in April will put a further strain on homeowners. It is a priority debt so if you enter into arrears you need to pay it off as soon as possible. However, some individuals may enter into the position of making a choice between paying council tax or paying their mortgage.

Avoiding repossession needs to be a priority. In both cases, communication is key and speaking to the council or your lender will help you in the long run.

If you are in a situation where you are unsure then speak to specialists in stopping repossession.

Homekeep Solutions will help you but first, you need to get in touch. Whatever stage of repossession you are at we can help.